Mike Shields (3:46)

And Thermometer may cut your flow off, but it's interesting that the money is still in the live sports, the rights. But the fandom thing is perhaps more important generationally than it's been in the past. And that's a weird place for, I think, the legacy media companies, the traditional rights holders, the leagues. That's a challenge.

Andrew Rosen (4:07)

The thing that I've hit on a lot, just as a theme in the past when I've written about media companies, and I don't use this as a sort of like, there's no one I begrudge in the media business, if anything, like I just, I really try and listen to what people say and map it back to the question of do they or do they not understand exactly what we just discussed, right? That consumers have an inelastic demand for what they have and then they want to be served in different ways. And the Athletics, one example, if you go to another genre entirely, like anime, Sony's Crunchyroll is another example where they just hyper serve fans of anime. And then you have the case of Disney where they serve fans of Disney content, but ESPN exists within that. And the question that they face as Disney and as ESPN in Bristol, Connecticut, as a longtime powerhouse in cable broadcasting is, well, the consumers still love sports, but what's the business of serving Them. And I think that you're seeing a lot of the Athletic is interesting because it's their, their argument is, well, somebody's going to pay for news and somebody's going to pay for memorabilia, access to memorabilia. And there's another deal that they did that I'm forgetting. But you know that they've, they've added to their flywheel. Maybe it's just being part of the New York Times bundle. But then the second part of it is, what if I'm a fan but I don't need the news, then what are the business models and I just want to watch sports. Well, you know, Dazn and ESPN plus have made bets that say, well, if you're a fan, you're going to tune in when you want to tune in. And what Dazn has learned, because you see it's, I think it continues to lose money, but its biggest problem is.

Mike Shields (5:45)

We should remind people Dazn is like, it's the John Skipper thing. They have a lot of ufc, they have some soccer, but they're, they're a subscription based, streaming, short sports alternative.

Andrew Rosen (5:56)

Yes. And they're more, they do, they do better in Europe. I mean, they're more focused on Europe. I shouldn't say they do better. They still broadcast here, but they're much more penetrated in Europe. But the thing that they struggled with is if you're assuming that AC Milan fans are going to stream a Milan match instead of watching it on their televisions, there actually aren't enough AC Milan fans to justify the scale of the investment that they've made both in the broadcast and the streaming technology. And I think ESPN struggles with that too. I'm a huge fan of Barcelona Football Club and the La Liga in Spain. I've been watching their matches pretty regularly this season just because they're having a great season and they have these really amazing players. But my relationship with FC Barcelona is a very weird one as a sports fan because number one, ESPN never tells me when a game is going to start. What I mean by that is I can go to espn.com and they'll tell me what time the game's going to start. But the Apple Sports app actually sends me notification 15 minutes before the match or, or at some sort of moment in the match where it's getting the scores close or somebody's coming onto the pitch who's a great legendary player. Apple is telling you when to tune into ESPN and it's not espn.

Mike Shields (7:06)

Like it's not a big enough priority or flaw in the interface or the partnership.

Andrew Rosen (7:11)

I don't. I mean, the short answer is yes. I don't know. I mean, there's so many. The thing is. But I do think it's a symptom of the challenge that ESPN has, right? Because it's. I do go to ESPN to read the news about FC Barcelona. I do watch the highlights there. But it's Apple that tells me whether or not I should tune into a match. That's the disconnect in all this. And I find that. And then you can sort of keep going down that long tail list of things that sports fans do, right? I'm not a sports bettor, but somebody who likes sports betting may turn to graph Kings or FanDuel for that news. That sports news about their team and, and engage with their team that way and betting that way. And then I think there's also the aspect of if I'm a Barcelona fan, should the ESPN plus app be personalized to me? And I'm sure this is a question that they're dealing with as they're building out flagship. And if so, what is a version of the ESPN app personalized to an FC Barcelona fan that's going to make me more likely to engage and less likely to churn out and seek a cheaper service or an alternative service to get my news and to get my notifications. The fundamental problem is I can't connect to my team in a way where they can look at me and say, okay, here's all the ways that this guy's gonna pay money. It's actually the opposite, right? Which is this guy's gonna tune into a broadcast and then he's gonna disappear and maybe he'll watch something or this, he or she will watch something on the app. Maybe another time. But they don't know that they have no relationship with me as a customer. Whereas Tubi's whole sales pitch, Netflix's wholesale pitch and even YouTube's wholesales pitch, right. Is we understand you. So that when you tune into, you're.

Mike Shields (8:53)

Here all the time, I see, I learn about you, I feed you stuff that you care about, right?

Andrew Rosen (8:58)

And you're going to be happy. We know how to delight you. And I find that in the sports world. And I think it's. Honestly, I just think it's a generational thing. Meaning the people who run, look, Bob Iger's, what in the 70s, the people who run ESPN are sort of closer to their 60s. You just don't have a generation of people who, who were raised with like the D2C business logic and understand it and have run a business that way. I think that there is a generation that, that does understand that. I mean if you think about it like D2C truly in like the smartphone era, that generation is pretty early in their careers. You know, if you think too right.

Mike Shields (9:32)

They'Re not in control yet, they're not there or they're not in positions of control yet.

Andrew Rosen (9:36)

And look like subscriptions only really emerged in iOS in 2009 and then in Android in 2011. So we're 13 years after that. Which means if anybody who sort of came into a legacy media to solve those problems is 13 years into their career, so maybe they're in their 30s, you're just not going to see that generational shift that needs to happen is so far away. And that's the biggest problem for sports right now.

Mike Shields (9:58)

Okay, I want to come back to that Todd, that idea. Getting back to the sports rights situation at the moment. I guess if you're a cord cutter cord never. There's a lot of. You can get a lot more sports than you could a few years ago, which is great. I think there's these attempts at the roll up. There's no simple solution for that. It seems like you had a venue that I never thought was going to work go away because of this FUBU deal. You have a new one coming from the satellite guys. It still seems like it's going to be so fragmented that you're not going to be able to satisfy the sports fan that a bundle is not going to solve all your problems. But I could be wrong. What is your take on that and what is your take on the flagship launch coming from espn?

Andrew Rosen (10:37)

The biggest problem with venue is that again coming back to the generational thing but, but just as pure like the to be value proposition versus the wholesale cable channel proposition is very, very few people want to pay for a cable channel online. The cable channel is not a value proposition that people search out. And in fact what they're getting if anything is the free version on fasts, right on free ad supported TV services. So I can get a cable channel on Pluto or Tubi or Roku or Google TV or Samsung or lg. But that's going to have like the content that I want and even Amazon that's going to have the content.

Mike Shields (11:14)

What's the distinction you're making? They don't want to. They pay for a streaming service but not a cable channel. I think I know what you mean, but what do you get?

Andrew Rosen (11:21)

Sure, it's a fair question. So when I Like, I don't. All of us back in the day when we had a linear. And those who still have a linear TV connection, you're not paying for cable channels, you're paying for access to cable channels. And cable channels are part of the value proposition of having cable access. But really, at the end of the day, you just want like crystal clear picture in your TV and a certain number of channels. And maybe there's certain channels that you want like ahb, HBO and Showtime, et cetera. But when you're online, you know, YouTube is not cable channels, Netflix is not cable channels. Fast takes the cable channel, you know, the TV Guide interface and the cable channel concept. Right. That there's a channel of content that you can tune into and just offers it for free. So the idea that, so the idea.

Mike Shields (12:02)

Of paying for that is just weird when you've got so many free linear channels like that online.

Andrew Rosen (12:06)

Right. It's just totally disconnected from where the consumer is today. Like, you know, the point, the real issue. And again, this is the, the inmost interesting thing about, again, thinking about Tubi. If it's in you, it's in here. And when you think about something like the ESPN flagship is what does the sports fan want online? If they want something like a cable channel experience, well, odds are they're probably not going to pay for it. That's the most fascinating part of it. And I just read your newsletter on this. The most fascinating part of the super bowl broadcast on Tubi was that people didn't pay for it, but they got a Super bowl broadcast. Yeah. That was actually better than broadcasts on YouTube TV and, and other services. Again, there's no lag. It was high quality, it was excellent. It was really like that. That is a paradigm shift. And so if you were a sports fan, you got what you needed from to be that day. And then the question that espn. And it's a very difficult question that I don't think they're going to answer. Well, just because I just think that just from listening to Disney earnings calls, reading, you know, having read the history of how Disney has dealt with technological change over the past few decades and they had a really rough decade between 2010 and 2019.

Mike Shields (13:19)

ESPN, the phone and things like that.

Andrew Rosen (13:21)

Sure. Like, and it's, you know, to me it doesn't matter that they failed. It just matters to me that whether or not they've learned from their mistakes. And I find that like, my favorite quote from Bob Iger is that I think is sort of the poker tell of all poker tales is when you said to the Wall Street Journal six years ago, we're not doing algorithmic personalization, I think if they want Mickey Mouse and they're clicking on Mickey Mouse, and this is something he said to the Wall Street Journal. So it's not something that is anything that I've dug up from anywhere. You can still find it online. And then six years later, now, literally the most recent earnings call, he's saying, well, we're really seeing the benefits of dynamic personalization in keeping users happy and retaining them. And so they've obviously learned, but it took them six years. And the difficult question that you have to ask them and the difficult question that they face is, can they move faster? And they've got a YouTube, they've got a CTO who came over from YouTube. Maybe they can. Are they learning the right lessons? And then the ultimate and very difficult question is, what is somebody paying them for? Like, what does it mean? What is fandom? And I find that Peacock has made very aggressive multi billion dollar bet. Sorry, NBCUniversal, through Peacock has made multi billion dollar bets on sports, but they still have NBC content next to sports. Right. Like, the idea is that somebody's going to use that app for NBC content and sports.

Mike Shields (14:41)

You're going to watch Bravo and the Chiefs game or whatever.

Andrew Rosen (14:44)

But if you looked at Peacock and said, does that have what the sports fan needs? The simple answer is, well, they broadcast, but they don't have anything else. And I think if you look@espn.com, does it have what the sports fan needs? Yes, I think it has a lot of what the sports fan needs. Does ESPN have what the sports fan needs? No, it's. I mean, it's sort of. I find Barcelona matches next to college.

Mike Shields (15:05)

Football matches I never watched.

Andrew Rosen (15:07)

Right, exactly.

Mike Shields (15:07)

Like there are fans of that, but there's not many. Yeah, it's.

Andrew Rosen (15:11)

But I'm not one of them. And that's my point. And I think that their difficult question, and I don't know how they're going to. I think it's a very difficult question. Just both from a. Look, sports is a relationship business and sports is a numbers game. I don't think there are any easy answers to the question of how do you make sure that the people who want volleyball a know that college volleyball or college lacrosse know that it's on espn. And then secondly, you're getting some form of Apple type notification that says, I know you love college volleyball or college cross tune into ESPN flagship to watch it. That's not easy. And this is Sort of the interesting thing about Iger's, you know, when the philosophical divide between him and Chapek, you know, his successor and now predecessor. But two, that philosophical divide was what's the role of data and what's the role of creative? And Iger was very loudly and very angrily beating the drum as much as he could to say, don't buy into data. And I think at this point, for them to succeed, they really actually need to figure out what it means to say for. To be. If it's in you, if you are a sports fan and you love volleyball, or you love gymnastics, or you love some sort of sport, this is the place to go where you're going to get. Be able to watch TV and get the best coverage. And I don't know if they're thinking that way. The way they're talking is much more like, you like sports and you like sports betting. You're going to love flagship. And I don't. I think it's. I'm not saying there's an easy answer, but I am saying that there are people out there who have clearer answers than traditional legacy media executives. Yeah.

Mike Shields (16:45)

Yeah, I do. I do wonder about the prospects of flagship. First of all, we don't know the price you're going for a sports fan that really cares about sports. But they only have, you know, they don't have everything. They have a lot of college football, a lot of. And a lot of NBA, but not everything. You're gonna have to package that up with other things. It seemingly. It's gonna get costly over time. You might as well just get cable. We'll see. Generally speaking, you know, you. You've written about this for years, this idea that everybody in legacy media was racing to become a DCC business, right? Chasing Netflix, trying to emul. Emulate those companies. Then all of a sudden they're like, I don't know if I don't want to do this. I don't know if it makes sense. Where are we on that path? Was that a mistake? Should they be heading that way? Can they do it? Why is that significant?

Andrew Rosen (17:28)

Yeah, I don't think it was. I mean, look, I don't think it was a mistake to pursue it. I just think that the way that they. The fundamental philosophical mistake was to say D2C is a new distribution channel and there are 400 million homes. But I think it was like 1.1 billion TV homes worldwide, and we can capture 400 million in five years. You can sort of remember the pitches. It's not just the Warner Brothers, Discovery guys. That conversation was going on for a while. There were digital guys who were predicting 1 billion home, some streaming service reaching 1 billion homes. The belief was that television people wanted television on television. And because they wanted television, movies via television and even in movies via theatre, watching movies on the televisions too, that with more screens and with Internet penetration, that they're going to want the same thing in their living rooms. And the most interesting thing was watching Netflix. And all this because Netflix never started. Netflix's whole point was the cable model sucks. You don't get what you want. So let us start with what you want. And we're just going to hyper serve that. And I think that Netflix built a personalization target, you know, content targeting platform within which the units are TV shows and movies. And I think the legacy media guys built a new distribution channel for their content. It just didn't care about who the end user was. It just thought that there was this inelastic demand for television content and for sports content. And that was the driving assumption. And if you are anybody who's been in D2C for the past 25 years, you know, that's the wrong, I mean, 26 at this point, actually even longer, almost 30. Like, you know, that's the wrong assumption. The right assumption is that people want what they want. And I, I, you know, the point that I've made and I rebranded my newsletter from Parkour, which is named my, my sort of company, to the Medium, which was a Nod to Marshall McLuhan. And the medium is the message. But McLuhan's basic point, which I think when you read it now is, is written so obtusely and so ridiculously that it kind of gets lost on most people. But his basic point was don't focus on the content, focus on the architecture of the medium. And that's going to dictate which content succeeds. And what you find is he was.

Mike Shields (19:57)

Talking about user interface without talking about user interface.

Andrew Rosen (19:59)

Exactly. And the fact that Netflix looked at the Internet, it's like, this is not a distribution channel. This is a distribution channel that enables personalization. And the question is, how do you arrange the puzzle pieces on the back end to make sure that a person in Peoria, Illinois and a person in Brussels, Belgium can log into the same app and either watch the same thing, which is the NFL game they just did, or something different Belgian drama and stranger things. So it becomes this question of it's just a very different model. And all the TV guys thought that this was an opportunity for additional scale and that people cared for TV content at scale, but instead the businesses that have succeeded and I'll talk about, come back to Netflix in a second. But like YouTube's a dominant platform on TVs. Why? Because it's figured out that what people really want is content for them. And they don't really care about the professional content. It's they like creators who, who, who, who do the stuff that they like and they, they're able. I mean for me, I could find stuff on anything from business professors to physics to, you know, Dave Portnoy pizza reviews. And I'm entertained. Like I, I don't need. It's figuring out what delights me and that's what it's all about. Quick footnote, but it's a really interesting thing. My favorite part of this whole history is Netflix and Jupiter's legacy, which is back in 2021. Do you remember when that show, they had a $200 million budget, they put it out and three weeks later they canceled it. And then within a month they announced that they're pivoting into gaming. I think there's. If I were to write a book tomorrow, the book that I would write is. I think that was at probably the moment when Netflix realized what the future looked like and the legacy media companies didn't. Because Netflix, up until that point you had Reed Hastings talking about becoming the next Disney Houston.

Mike Shields (21:45)

They wanted ip, right? They wanted ip.

Andrew Rosen (21:48)

They were going to do amazing things. They were catching up to Disney and animation. You couldn't believe how good they were. And then after that, after that failure, they stopped that because that story ended and also their animation division blew up too. But I think that that was the moment and they think far ahead. So I don't think this was a sudden turn. I think this was sort of know the decision pre laid out, but I think it was the moment where they said I just. Where they basically said the unit costs of content for what we do, for delighting consumers on the, for over the Internet distribution just don't need to be Hollywood. And we don't think users care. We're learning that users don't care about the ip.

Mike Shields (22:24)

We don't need to be hbo, we don't need to Disney. We need to make a lot of stuff makes a lot of people happy.

Andrew Rosen (22:29)

But they, but they were also saying that Disney and HBO and all their competition don't need to be that either. And you're only seeing these guys figure this out now, right? I mean the Agatha all along from Disney I think was like $40 million, which was a fraction of anything that they'd done before in streaming. And I think that's a very difficult challenge for legacy media companies, whose enormous scale was to be able to cost effectively produce content, market it and monetize it. And now you're seeing that Netflix realized five years ago that consumers didn't want this. YouTube has learned and ran pushing that people don't want. Exactly. But you still see these guys. And again, you see somebody like Iger, you see somebody like Zaslav, and even see John Malone when he's defending Warner Brothers Discovery, talking about the value of ip. Whereas really what the Internet is, is a medium that if you understand the medium is the message, you understand that the medium has different tools for delighting consumers than linear TV had, then you'll understand that that's actually wrong. The relationship with IP is not about the movie, not about the show. And again, the relationship with the sports team is not about the broadcast. It's more dynamic. There's no one size fits all. And the best businesses like New York Times and Crunchyroll are basically at the point where they say, we're just going to make our consumers happy. And New York Times now is saying 32% of their subscribers don't subscribe to news.

Mike Shields (23:54)

Yeah, they're a game company in a lot of ways.

Andrew Rosen (23:56)

That's stunning. That's crazy. 20 years ago, you wouldn't have thought they'd be saying that. And, and I think that I, you know, I think all those guys are starting to realize that maybe the pitch that they're going to have going forward.

Mike Shields (24:07)

Okay. You know, with sports rights, you might assume, okay, when Netflix is getting aggressive now, Amazon's already there, all the sports rights go to the big streamers who could pay more. But, you know, with the recent NBA deal, they are hedging their bets, are still on broadcast, it's still important, there's still some stuff on cable. Does eventually all this, all these rights go to streaming? Or is there still going to be a role for the masses and getting this out for free for everybody?

Andrew Rosen (24:36)

I think it's probably. There's never going to be one winner. I mean, I don't think streaming is such a, like, such a specific use case. Again, it also might coming back to the generational point, it may just be generational. Right. I mean, that the NFL opt out is going to be the most fascinating thing to happen. And, you know, we're, we're much closer to it than we were a couple years ago. Right. We're now what do you mean? The NFL opt out in 2029. So we're much closer to that than we were before. And they, I think they know, I mean look, they're seeing the data that there's a generational shift happening, but the data from the Super bowl is 120 million people tuned in and only, you know, and I think it was like 130something120 and then with 13.6 were streaming on Tubi. Yeah, there's a takeaway there, but it's not the kind of takeaway that you're asking about. Right? Like is the future going to be all streaming? And I think, I think all the data suggests that people still listen to terrestrial radio, people still listen to satellite radio. Like humans don't really change. And so I think that it's just going to be kind of a mishmash of different broadcast models. And I haven't looked at the data close enough to give you a sense of where I think how it's going to play out in terms of numbers. But I think that the really interesting question, and I don't know who has the answer for this is if anybody figures out what it means to super serve the sports fan, what they'll pay for. Again, you're dealing with consumers and consumers are irrational. And then you're dealing with consumers who are sports fans who are highly irrational.

Mike Shields (26:05)

Yes, by nature. That's what you do. That's what it's all about. I want to make sure I don't forget we want to shift gears. You've been writing a lot about generative AI, its impact on this world and just the overall business. Give people some highlights of what you've been working on and where they should be thinking if they're not.

Andrew Rosen (26:22)

So I spent last year back in February I wrote a column for the Information where I interviewed Samir Chowdhury of the YouTube creator duo Sameer columnist. Because they had this really interesting interview with Neil Mohan of YouTube, CEO of YouTube. And I sort of followed up with him and they had all these fears about gender of AI. And I followed up with them to see whether those fears were still true and they weren't. And I ended up interviewing about seven other creators and I've interviewed an eighth actually just in the past week. And the thing that I was trying to understand is how do you see the world through these visionary builders eyes? Where do they see this all headed? Because they have all these signals about where things are headed. They're very clear eyed about them, they understand the tech, they are Constantly experimenting. And if you ask them, you know a lot of where this stuff is headed. One of my favorite interviews with was with Edward Saatchi, who founded a platform called Showrunner. And Showrunner is very much about is the extreme of if it's in you, it's in here. You know, it's. Which is allowing yourself to tell. To create your own TV episodes of animated shows like the Simpsons. And so in other words, it's just text to video prompt. And everybody thinks that we're sort of there now, but they think it's going to continue to go down to that extreme at some place in the future. And that's how they see it. And so for me, I'm really just trying to find the signals and the noise because I think those guys are playing in the future. They're talking about it and thinking about it in very clear ways. And I see my role. Some of it's kind of journalistic, some of it's also analytical, which is saying, okay, here's a signal. How do we think about it? What does it tell us about what we're seeing now? I talked about Showrunner, a recent contextualized showrunner against Warner Brothers Discovery's business model and Netflix's Bet on Games. There's things that are analogous and it's like, what can we tease out? But then also how do we start understanding where this stuff is all headed? And things are moving so quickly and. And they're moving in a way where there's a real disconnect between these guys who see themselves as tech companies and Hollywood, which. Which sort of sees itself as trying to hold on to a lot of the business models that worked. And my favorite story in that is I spoke to Tom Patton, who's the. If you, if you Remember, there's an AI fully AI animated movie generated AI movie that came out on. It was posted on YouTube like last December or November, and it was called where the Robots Grow. It was about an hour and a half long. And he told me that he approached Hollywood studios and said, I'd like to distribute this. Are you up for it? And they said, yes. Can you wait till Q2, 20, 25? Which is basically like eight months for him.

Mike Shields (29:11)

And he said, no way.

Andrew Rosen (29:12)

I'm a tech company. I don't do that.

Mike Shields (29:14)

I don't have to get this out now.

Andrew Rosen (29:16)

And so you have. That's going to keep on playing out. I don't know when that reconciles. Usually doesn't reconcile anytime soon. But you have these guys who see the future are Taking big swings, producing the content. And I think the signals are really, really interesting. And they give me chock a block like so many, so many interesting business, you know, business logic and signals. And so I'm trying to spend more time in sussing those out and applying and surfacing them. The thing that I struggle with is that the essay format really forces me to only focus on very specific ones. And writing a summary of, like, the different ones doesn't. That doesn't feel like. That doesn't feel as valuable. I could do it, but I just don't feel like it's as valuable. So the thing that I'm working on in 2025 is diving deeper into those signals, pulling out the context, providing a richer view of the different market signals and where things are headed and helping people filter the signals from the noise. Because it is really hard to understand.

Mike Shields (30:15)

What'S going on without giving too much of a way of. What you're writing about is, are the creators you've talked to, are they threatened? Are they like, I don't want to be replaced by AI like anybody else? Or are they like, we gotta embrace these tools and change what we're doing?

Andrew Rosen (30:29)

Yeah, it's the latter. I mean, my favorite line was from Samir Chowdhury, where he said a great quote that I couldn't use in the column I wrote because it wasn't really relevant, but he basically said, like, he thinks that AI is going to. I may have used it actually, but anyway, he thinks that what AI is going to do is just add superpowers to people who know how to tell stories. And that's going to play out in great ways on YouTube. But for the people who don't know how to tell stories, it's just going to work against them and they're going to fall by the wayside. And when I talk to these creators, what I'm finding is that these tools don't work unless you really have a skill set. And I think that I'm curious how it is for you, but for me, I use Claude as an editor. I don't really. As somebody who edits and somebody who writes, it'll write something, I'll say, well, that doesn't make sense. And it'll say, you're right, it doesn't make sense. Let me shift it. Or if you ask it to play the role of Strunk and White, it'll just reduce everything you've written, you know, 1500 words to 500. And it's a bit heartbreaking, but so.

Mike Shields (31:27)

But.

Andrew Rosen (31:27)

And it may lose the meaning, but it's also doing something really valuable. So you the point is that you can't use these tools without the right skillset. So actually what you're finding is that the skill sets of being a good creator are only going to become more important and that there's something, there is an inherent unreliability in these tools, which you can only have skill sets to harness and manage.

Mike Shields (31:47)

Andrew, I don't need an editor, so that's not really an issue for me, but I can understand why it might help you listen. Awesome conversation. So many different ways we can go here. But thanks so much for your time here. Let's do this again.

Andrew Rosen (31:57)

Yeah, no, I look forward to it. Thank you. Real pleasure.

Mike Shields (32:00)

Thanks again to my guests this week, Medium Shifts, Andrew Rosen and my partners at Elemental tv. If you like this week's episode, please take a moment to rate and leave a review. We have lots more to bring you, so please hit that subscribe button and we'll see you next time for more on what's Next in media. Thanks for listening.