David Bloom:
Hi, everybody. I'm David Bloom with Next TMT here at the StreamTV live show in studio with Laura Martin, senior analyst at Needham & Co, and one of my favorite stirrers of the pot.
Laura Martin:
That's so true.
David Bloom:
And she takes a long look, a long, withering look quite often, at some of the media companies out there. I'm interested in what you're seeing here at the StreamTV show and the state of the business from an analyst's point of view.
Laura Martin:
Sure. So I'll say two things. I think the first thing I'm really struck by is I think Wall Street, which comes from a 30,000-foot level, really believes that the leaders in streaming today are Amazon and YouTube, YouTube because it integrates-
David Bloom:
Everybody.
Laura Martin:
... NFL, best of the best, with user generated content, so on the content side, they're blurring the lines. And then Amazon because it's taking connected television advertising units on a big screen and tying them to purchases. So we think that's where the world's going generally, writ large.
David Bloom:
So it's more that e-commerce opportunity is big on Amazon.
Laura Martin:
Yeah. These are leading two different ways. And I feel like people in this room are ignoring both of them. They think they're controlling their own destiny. They think that they're leading. They're defining the market far too narrowly, and as a result, they're falling further and further behind. They're not talking about either of those two things, and Wall Street's like, "That's the future of streaming. Why aren't you talking about performance television ads? Or why aren't you talking about short form omni device and influencers plus premium content?" So I think that's my big takeaway is there's a real disconnect between what money people are saying on stocks and what these people are saying in the rooms.
David Bloom:
I think some of that is whistling past a graveyard, I would say. But I also would say that on the YouTube side, one of the big themes has been, what do we do with YouTube? How do we partner with them? How do we work around them? How do we work with them? We'll have multiple conversations on stage and here with some of the YouTube players and the people doing stuff on there. I did a fun interview yesterday with Trey Kennedy, who's big on TikTok, big on YouTube, started out as a Viner out of Oklahoma doing six-second comedy bits 12 years ago, and now he's got a special on Hulu and a live national comedy tour. So he's the kind of guy as a creator who's putting stuff on traditional media. The question is, how do you as one of these smaller players succeed? It sounds like you think it's going to be very tough unless they get right with either YouTube or Amazon to really go somewhere.
Laura Martin:
If the question is what would I do if I was a small streamer, the answer is I would be on every aggregation platform. I would be looking to go offshore. I would use generative AI to lower your cost structure, because there's a lot of tools coming that will lower costs, and they should be fast adopters of that. And ultimately, I see no strategic advantages to small scale, so ultimately they should sell out or bundle with a bunch of other small players, like remember in the olden days we had cable and they had the small cable operators got together.
David Bloom:
What is this cable thing you speak of? I know not.
Laura Martin:
So anyway, aggregation, if you're small, has power.
David Bloom:
Yes. So bundling is definitely going to be a way to survive. Looking forward, we've seen a lot of stuff in the last couple of weeks. Warner Brothers Discovery just announced that they're going to do the split that they foreshadowed with the reorganization. What's the state with the big players at this point? It feels like they're all being held hostage by the Trump administration in one way or another as they're champing at the bit to consolidate or reorganize or reform or buy something or sell something. What's the state of play right now of the big players?
Laura Martin:
Distracted. Paramount is being forced to pay $30 million personally to the administration in order to get their deal approved, which feels like extortion to me. But meanwhile, Paramount's not getting done, and now Sherry has cancer, which is tragic.
David Bloom:
Unbelievable.
Laura Martin:
Warner Brothers, if they go forward with the split, is just distracted for a year, and then they can't do a deal for two years in order to protect the tax, which is a really bad way to run a business, protect the tax.
David Bloom:
But that's how John Malone operates, right?
Laura Martin:
Yeah, which is unfortunate, because I think it's the wrong strategic move at this point, but it just means they're distracted, which means they're not a player. We're not going to be talking about either one of those companies for the next two or three years. So it's Disney, Netflix, Amazon, and YouTube is who will be... That will be the new competitive framework that we're talking about, and the question will be, is Disney too small scale at 200 billion to compete? Because Netflix is 500 billion and the rest are 2 trillion, so-
David Bloom:
We talking about market cap for these corporations, which is the way Wall Street-
Laura Martin:
Yeah, yeah, and that will be the competitive set.
David Bloom:
Absolutely.
Laura Martin:
And that's who will be determining. And these small players, they just get left behind, unfortunately,
David Bloom:
No one talks about Apple TV+.
Laura Martin:
No. It's irrelevant.
David Bloom:
It's irrelevant other than a nice part of their bundle that they offer their one premium subscription basically, right? It's just another slot in that. But it's couch change, I guess, otherwise, correct?
Laura Martin:
It's a hobby for them.
David Bloom:
It's a hobby. Well, this is more than a hobby. Laura, as always, it's a pleasure to see you.
Laura Martin:
Super fun.
David Bloom:
Have a great show.
Laura Martin:
Thank you.
David Bloom:
I'm David Bloom with Next TMT here at the Stream TV show with Laura Martin, senior analyst at Needham & Co. Thanks.