Transcript: Chill out. Netflix is winning the streaming wars

This is an audio transcript of the FT News Briefing podcast episode: ‘Chill out. Netflix is winning the streaming wars’

[MUSIC PLAYING]

Marc Filippino
Good morning from the Financial Times. Today is Friday, February 9th. And this is your FT News Briefing.

[MUSIC PLAYING]

The last safe place in Gaza might be Israel’s next target. And OpenAI is growing like crazy. Plus, Netflix is looking around at its competition and saying: is that all you got?

Elaine Moore
So what appears to be happening is that Netflix is winning in the streaming wars.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

[MUSIC PLAYING]

OpenAI is about to become one of the fastest-growing tech companies ever. The San Francisco start-up and creator of ChatGPT is on track to reach $2bn in revenue this year. What’s more, insiders think OpenAI might even be able to double that figure in 2025. That’s because basically everyone wants to use the company’s tech to incorporate AI tools into the workplace.

[MUSIC PLAYING]

There’s one place in Gaza that has mostly been spared since fighting started between Hamas and Israel, and that place is called Rafah. More than half of Gaza’s population is crammed into this tiny bit of land, and now people are worried that Rafah might become Israel’s next target. Here to talk to me about this latest stage in the war is the FT’s Heba Saleh. Hi, Heba.

Heba Saleh
Hello.

Marc Filippino
So Heba, just get us up to speed about the situation in Rafah? How did it become the last refuge inside Gaza?

Heba Saleh
Well, Rafah is at the southern end of Gaza. It’s on the border with Egypt. And as Israel conducted its military offensive, it has issued evacuation orders to populations to move to the south. And the offensive itself kept moving south. So fighting has been raging in Khan Younis, which is the biggest town in southern Gaza, and people have been evacuating from Khan Younis and going to Rafah. Many of them have been displaced multiple times to escape the offensive.

Marc Filippino
So what’s it like there now with all those refugees, Heba?

Heba Saleh
The situation is dire. Rafah is a town which normally houses a quarter of a million people. It has five or six times its normal population. People are living either in UN shelters, overcrowded apartments, or in tent cities — vast tent cities that they have erected on the street. They have little food. They are exposed to the cold. People are living in very, very difficult conditions. And already there have been bombing raids on Rafah, which is what is creating the fear that Rafah is the next destination for the military offensive.

Marc Filippino
Yeah. Let’s talk about that potential offensive for a second. I mean, what would Israel hope to achieve by going into Rafah?

Heba Saleh
Israel is determined to root out Hamas militants, and it has said that it’s going to wage war everywhere until it has found Hamas leaders and until it has found the hostages. So it’s basically going through all of the Gaza Strip. And with 1.4mn people in Rafah. It may believe that Hamas leaders that it wants are there.

Marc Filippino
OK, but if Rafah is so crowded with people, will Israel’s military even be able to manoeuvre around them? I mean, does it have a plan?

Heba Saleh
It’s not clear what Israel’s plan is. In the past, they have dropped leaflets and asked populations to leave. It is not clear if they have a plan to relocate the population, but worth bearing in mind that this is an exhausted population. The threat to Rafah has been alarming. The United Nations, UNRWA, the main UN agency working in Gaza, has warned that an attack on Rafah would mean hundreds of thousands of people on the move again. Right now, we don’t know what will happen. Certainly, it will be a very dire situation for these people, and it’s also going to be very difficult for the humanitarian population to deal with. Again, with hundreds of thousands of people on the move looking for a safe place.

Marc Filippino
Heba Saleh has been covering the Israel-Hamas war for the FT. Thanks, Heba.

Heba Saleh
Thank you.

[MUSIC PLAYING]

Marc Filippino
Ukraine’s President Volodymyr Zelenskyy has dismissed his top military commander. It’s a major shake-up for Ukraine, and it follows months of tensions over strategy and tactics. The upheaval comes during one of the most difficult moments for the country since Russia’s full-scale invasion nearly two years ago. US military aid is still stuck in Congress, and the ammunition that Ukraine desperately needs to hold back Russia is running dangerously low.

[MUSIC PLAYING]

Streaming services have been reporting earnings the past couple of weeks, and the results are a little lopsided. Disney released its fourth-quarter numbers yesterday, and its streaming services are still losing money. Netflix, on the other hand, had a phenomenal end of the year. Here to talk to us about the rest of the streaming landscape is the FT’s Elaine Moore. She’s a tech columnist based in San Francisco. Hi, Elaine.

Elaine Moore
Hi there.

Marc Filippino
All right, Elaine, can you give us a few more details about how streaming services did in the fourth quarter?

Elaine Moore
Well, there’s a diversion going on. So Netflix has just had an incredibly amazing quarter. It had the fastest growth of subscribers for a long time. It’s making a profit. But what you have is the rest of the sector is not doing so well. So Disney has, is still reporting an operating loss for its streaming services. And although it’s growing, it’s not growing at the same sort of pace. And it has less than half the number of subscribers as Netflix. So what appears to be happening is that Netflix is winning in the streaming wars.

Marc Filippino
Well, just like that, all right. Well, tell me more about that. What were some of the more recent battles in this war?

Elaine Moore
What’s happening is that you have the alternative streaming providers who have tried to step up and have a fight against Netflix and began by hoarding all their content and trying to set up rival services and undercut the prices of Netflix and now admitting defeat. And so what they’re doing is they’re licensing some of their content to Netflix. And this is such a huge turnaround from what was happening a couple of years ago. So this year, Disney has licensed content back to Netflix again after the companies spent a long time trying to cut off Netflix from some of their more popular content. I mean, it’s not the newest programmes that Disney is making. It’s things like this 90s sitcom Home Improvement. So things that were very popular, you know, a decade or more ago. And some of them are also joining forces. So we had this announcement this week that Disney, Warner Brothers and Fox is bundling together its sports streaming services for one new streaming platform.

Marc Filippino
OK, so that’s interesting. So basically you’re saying Netflix has won. It’s getting all this content again. And meanwhile, it’s competition is partnering up. Can you tell us a little bit more about the sports bundle that you mentioned?

Elaine Moore
What happened this week is Disney, Warner Brothers, Discovery and Fox have announced a new streaming service in which they’re going to provide live sports content on new streaming platform. And the reason that’s interesting is that what has happened with sports in particular is that with streaming, consumers can kind of pick and choose what they want to watch and what they want to pay for. Unlike cable TV, where things tend to be bundled up together and you just had to pay for content even if you weren’t watching it. And the providers have found that it’s actually quite difficult to make a profit from. So what they’re doing is they’re joining up together, bundling things up back together again and hoping to attract more subscribers, more profit that way.

Marc Filippino
I got to say, I see the appeal, right? When I go to watch a game, and then I find out that it’s on the streaming service that I don’t own, I get frustrated, right? I mean, are there just too many options out there? Is this part of the strategy?

Elaine Moore
I think that’s right. And that’s something that all consumers complain about. I find the same thing. It’s quite difficult to find the thing that you want to watch. What’s really interesting is the way that streaming services are going backwards to a set-up that already existed, that a company like Netflix actually tried to untangle and change completely but is now coming back into fashion once again.

Marc Filippino
Everything old is new again. So does that mean that we’re going to see more consolidation, Elaine?

Elaine Moore
I think so. I think that what this could mean is that we actually might see consolidation of the companies as well because as Netflix has shown, it’s still quite hard to make money from streaming. So Netflix is by far the biggest company in this sector that it has managed to get its subscribers and to build this huge company by taking out vast amounts of debt. And it’s taken a long time to produce some profits. So if you’re a company like Disney and you’re under pressure to start producing a profit from streaming, then this could be the start. Not just to bundling up the services, but maybe bundling up the actual companies too.

Marc Filippino
Elaine Moore is the FT’s deputy Lex editor and a tech columnist. Thanks, Elaine.

Elaine Moore
Thanks so much.

[MUSIC PLAYING]

Marc Filippino
You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back next week for the latest business news.

[MUSIC PLAYING]

The FT News Briefing is produced by Kasia Broussalian, Sonja Hutson, Fiona Symon and me, Marc Filippino. Our engineer is Monica Lopez. We had help this week from Saffeya Ahmed, Breen Turner, Zach St Louis, Sam Giovinco, David da Silva, Michael Lello, Peter Barber and Gavin Kallmann. Our executive producer is Topher Forhecz. Cheryl Brumley is the FT’s global head of audio, and our theme song is by Metaphor Music.

[MUSIC PLAYING]