Barry Diller, the chairman of IAC, recently shared his concerns about the future of the Hollywood studios and their need to quickly adapt or face potential disastrous consequences. In a podcast interview with journalist Kara Swisher, Diller also expressed pessimism about the ongoing strikes by SAG-AFTRA and WGA. He suggested that the legacy Hollywood studios should consider splitting with Netflix and their tech counterparts at the AMPTP.
Diller argued that the Hollywood studios should not be in the same room as their competitors like Netflix, Apple, and Amazon. He believes that these companies are not in the same business of producing movies and television. Netflix, according to Diller, has been the catalyst for the strikes due to its business model, and he predicts that next year, when the content pipeline dries up, the impact on subscriptions for other streaming services will be catastrophic. Diller believes that these strikes only strengthen Netflix and weaken its competitors.
Interestingly, Diller pointed out that HBO and Showtime had their own streaming services, but they were not threatened by Netflix. However, both have now been integrated into Warner Bros. Discovery’s Max service and Paramount’s Paramount+. Diller suggested that instead of abandoning the traditional pay-TV model and going all-in on streaming, the Hollywood studios should reorient themselves to revive the bundle.
He proposed that the studios should recognize that they each own a great television network with full distribution in every household in the United States. Diller urged them to compete with one another instead of treating their networks as something of the past. He believes that taking some of their shows and creativity and building their networks back up is a viable opportunity.
Despite his suggestions, Diller expressed skepticism about the ability of the studios to make this pivot in time. He believes that the consolidation of the industry has led to a decline in their standing, and they face significant challenges that may be insurmountable. Diller did acknowledge the leadership of executives like Bob Iger, but he believes the problems they face currently may be insoluble.
Diller ironically mused about the once-golden Hollywood entertainment ecosystem, implying that it may not be able to return to its former glory. He also commented on some controversial statements he made, such as advocating for top actors and executives to take a pay cut to resolve the strike. Diller clarified that he meant it as a gesture of solidarity and to alleviate the existential problem caused by the strike.
Lastly, Diller addressed the insider trading investigation related to his acquisition of shares and options in Activision Blizzard before the announcement of the Microsoft acquisition. He emphasized that there was no inside knowledge involved and that he and others involved had been extensively interviewed by the DOJ and SEC without any further communication from them.
In conclusion, Barry Diller’s concerns about the Hollywood studios reflect the changing dynamics of the industry. He believes that the studios should reconsider their relationship with Netflix and other tech companies and reorient themselves to revive the bundle. However, Diller remains skeptical about the studios’ ability to adapt in time and suggests that the Hollywood entertainment ecosystem may not regain its former glory.