Friday Mailing: What will IAC Chairman Barry Diller Say About Streaming in 2022?
Researching Wednesday's Member Mailing - Chapek's "Three Pillars" for Disney's Future Faces Tough Trade-Offs In Sports Betting - brought me back to the roots of the PARQOR Hypothesis, which were two mailings from August 2020 (NOTE: these are in pre-Information and pre-Substack formatting):
An essay on IAC Chairman Barry Diller's snarky prediction to The New York Times' Ben Smith about legacy media in the streaming marketplace: "Disney will remain relevant into the future. All of the rest of them are caddies on a golf course they’ll never play.”
A longer essay that tied this quote to IAC's letter to shareholders about its investment in MGM Resorts, and laid out the attributes PARQOR Hypothesis.
Diller has been a sage who is fun to write about because he can be brutally honest, and also snarky. He also knows what he is talking about, as I wrote in the first essay:
It is worth listening to Diller given that he has found more success in digital media with DTC models than with legacy media models: with Vimeo as a B2B service than as a YouTube competitor, with Match.com’s portfolio of dating apps, and with DotDash (formerly About.com) as an intent-based media company that is unapologetically a Google parasite (and profitable)...
Diller has been more focused on business models with defined conversion funnels than on trying to reconfigure legacy media business models into new conversion funnels. So, as a former legacy media executive, Diller arguably understands the pitfalls of trying to find wins with the latter strategy (remember College Humor?) and instead actually finding wins by betting on businesses with narrow value propositions that can scale.
It's worth re-reading the first essay for some provocative predictions I made based on Diller's caddies quote that have held up well.
The PARQOR Hypothesis argues that the media businesses most likely to succeed in streaming and beyond must meet these five attributes, and highlights any missing pieces they (arguably) may need to solve to optimally succeed.
Those attributes are summed up in the BEADS acronym:
an Aspirational Brand
Existing user base at scale
Multiple Avenues to monetizing the same IP, and
Daily value proposition (something new for fans to consume daily)
Sales Channels: Online (digital) and offline (physical) commerce
I think this has been as valuable a takeaway as any from Barry Diller (and his management team at IAC) because this checklist helps to quick identify the strengths and weaknesses in pure-play streaming bets.
Diller in 2021
Barry Diller was a fun interview, again, in 2021. He surfaced again last May at the opening of his Little Island Park off of the Meatpacking District in Manhattan, and was interviewed by CNBC.
I wrote about in A Short Essay on IAC Chairman Barry Diller’s Newest Opinions on AT&T, Comcast and Disney.
Diller had a few provocative takes:
He walked back his confidence in Disney from his "caddies" quote above when he offered a bearish take on Disney CEO Bob Chapek’s decision-making and DTC strategy;
Diller was notably bullish on Comcast’s strategy in streaming because they are “the only ones with both feet on both sides” of the streaming marketplace with X1 software and Peacock;
By implication, he suggested other pure-play legacy media streaming services were "land-locked" on one side of the streaming marketplace; and,
Last, he called the merger of WarnerMedia and Discovery “the great escape” for both WarnerMedia and AT&T, and praised “the scrappy Mr. Zaslav” as the right executive to lead it.
I think, to date, all evidence suggests:
his first take has held up well;
his second take has not held up well due to Peacock's shortcomings;
pure-play legacy media streaming services are indeed "land-locked" and may need "aggregator 2.0 bundles" to succeed;
and the future of the Warner Bros. Discovery merger relies on a lot of moving pieces, some of which are not Zaslav's strengths.
Diller also surfaced again in July 2021 with this take on Hollywood in an interview with NPR, which I wrote about in A Short Essay on “the next Kubrick” & New Definitions of “movies” & “popular reception”.
"These streaming services have been making something that they call 'movies,' " he said. "They ain't movies. They are some weird algorithmic process that has created things that last 100 minutes or so."
His point was, whatever Hollywood used to be is not what Hollywood is becoming in the streaming era.
What will Diller say about 2022?
It's a fun question to imagine what Diller will say at streaming and legacy media in 2022 when he inevitably re-emerges for an interview this year.
I predict Diller will:
agree with Chapek's objective but will have harsh words for Chapek's Disney and his third pillar of a "relentless focus on our audience, and break down why Disney+ seems adrift;
continue to applaud and sell the Warner Bros. Discovery merger, and bite his tongue on the negative implications for new CEO David Zaslav of WarnerMedia without the digital expertise of CEO Jason Kilar (...if he leaves);
walk back his praise for Comcast's Peacock execution given its struggles at the Tokyo Olympics;
imply all other legacy media streamers still need to find alternative but complementary business models - whether imitating Comcast's X1 strategy or moving closer to a Disney-like BEADS ecosystem.
I think Diller will be asked about the Blackstone Candle Media investments, and I think he will favorable to them. But, he will also share Blumhouse producer Jason Blum's take that streaming's inelastic demand for content and upfront payment model is “completely madness".
That said he will agree with Blum that, “if that is what the market is bearing”, all producers should be taking advantage of it.
Where I can't read Diller yet is on the emergence and growth of the creator economy, which is basically the disaggregation and democratization of his QVC and HSN models. IAC has a foot in it with Vimeo - which is used by Creative professionals, indie filmmakers and small businesses - but the creator economy is increasingly trending towards the marrying of e-commerce and video production.
That is something which Diller understands the DNA of unusually well, but has said unusually little about, to date.
My prediction is that will change in 2022, too, and I am eager to hear how the creator economy is similar and different to the QVC and HSN models.
NOTE: I wrote about Diller's guidance to David Zaslav in streaming in The AT&T-Discovery Merger's Questionable Bet on Rebundling