Sept. 7, 2025

Disney vs. Netflix - "The Hundred Billion Dollar Suicide Pact: How Mickey Mouse and Netflix Murdered Hollywood"

Show Notes
Transcript

November 2019: Disney+ launches to destroy Netflix. By 2025, they've destroyed everything—including themselves. From Bob Iger's $71 billion Fox acquisition to Reed Hastings' password crackdowns, from $450 million Knives Out deals to canceled HBO Max movies, this is how streaming's promise became Hollywood's apocalypse. Featuring the executive blood feuds, talent wars worth hundreds of millions, pandemic acceleration, double strikes, and David Zaslav's scorched earth rampage. Marcus Reid reveals how entertainment's biggest companies chose mutual annihilation over letting Netflix win—and why consumers now pay more for less while creativity dies on the algorithm altar.

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Calaruga, Shark Media, November twelfth, twenty nineteen. Bob Eiger stands

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before Wall Street analysts in Burbank, California, his silver hair

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perfectly quaffed, his demeanor calm but triumphant. Disney Plus has

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just launched with ten million subscribers on day one, crashing

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servers and exceeding every projection. Behind him, a screen shows

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the iconic Disney Castle logo. In front of him. The

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future of entertainment hangs in the balance. Three thousand miles

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away in Los Gatos, California, Reed Hastings watches his Netflix

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stock drop five percent in after hours trading. The man

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who once tried to sell Netflix to Blockbuster for fifty

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million dollars and was laughed out of the room is

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now worth billions. But seeing his streaming monopoly shatter in

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real time, We've been preparing for this moment, Eiger declares

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to the analysts. Disney's content is unmatched, our brands are beloved,

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and now we're going direct to consumer. What he doesn't say,

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what none of them will admit for years, is that

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this war will destroy Hollywood's entire ecosystem. That in trying

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to beat Netflix, they'll burn down the very industry they're

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trying to save. That mutually assured destruction isn't just a

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Cold war concept, It's a business strategy. Welcome back to feuds, power, pride,

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and payback. I'm Marcus Reid. Some feuds are about market share,

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others are about creative vision. But the streaming wars were

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about something more fundamental, survival. This is the story of

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how Hollywood's most powerful companies decided they'd rather die together

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than let Netflix live alone. It's a tale of disruption

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and desperation, of billions burned and empires broken, of executives

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who hated each other so much they forgot they needed

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each other. It's about how the House of Mouse went

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to war with the company that killed Blockbuster, and how everyone, studios,

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creators and consumers ended up losing. This is episode twenty seven,

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The Kingdom Strikes Back, How Mickey Mouse went to war

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with Netflix, Act one, The Disruptor two thousand and seven

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to twenty fifteen. To understand how Mickey Mouse ended up

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in a death match with a company that used to

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mail DVDs, you need to understand Reed Hastings's original sin.

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He was right about everything, and he made sure everyone

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knew it. The legend goes that Hastings founded Netflix after

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Blockbuster charged him a forty dollars late fee for Apollo thirteen.

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Whether that's true or just Silicon Valley mythology, what's certain

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is that by two thousand seven, his DVD by mail

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service was hemorrhaging money on a wild bet that some

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day everyone would stream movies over the internet. The goal

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is to become HBO faster than HBO can become us,

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Hastings told his team in twentsand eleven. It was an

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audacious statement from a company that Hollywood still saw as

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a glorified video store, but Hastings understood something the studios didn't.

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Content was becoming commoditized, but convenience was priceless. The early

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streaming years were a gold rush for everyone. Studios saw

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Netflix's free money a new revenue stream for old content

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gathering dust and vaults. They licensed everything Disney Classics, Warner Brothers, Blockbusters,

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Universal comedies. The prices were laughably low because executives thought

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streaming was supplemental income, not the future. Bob Eiger, Disney's

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CEO since two thousand and five, was actually one of

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the few who saw the thread. Early in two thousand

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and six, he'd shocked Hollywood by putting ABC shows on iTunes,

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understanding that distribution models were changing, but even he didn't

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initially grasp Netflix's ultimate ambition. In his mind, Netflix was

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a partner, not a competitor. Disney was happy to take

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Netflix's licensing checks, which by twenty twelve reached three hundred

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million dollars annually. The relationship was so cozy that in

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twenty twelve, Disney signed an exclusive deal giving Netflix first

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run rights to all Disney movies starting in twenty sixteen.

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It was hailed as groundbreaking. Eiger and Hastings smiled for photos,

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two visionaries reshaping entertainment together, But behind the scenes, data

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was telling a different story. Netflix wasn't just distributing content,

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they were learning from it. Every view, every pause, every

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rewatch taught their algorithms what people wanted, and in twenty thirteen,

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they used that data to create House of Cards, their

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first original series, poaching David Fincher and Kevin Spacey with

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promises of creative freedom and upfront guarantees. Hollywood laughed, a

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tech company making prestige television, please, But House of Cards

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earned nine Emmy nominations, and suddenly Netflix wasn't just a pipeline.

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They were a studio. Orange Is the New Black, followed

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then Stranger Things. Each success brought more subscribers, more data,

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more power. The studios were like the proverbial frog in

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slowly boiling water. By the time they realized Netflix was

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cooking them alive, it was almost too late. Netflix had

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grown from twenty million subscribers in twenty ten to seventy

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five million by twenty fifteen. Their market cap exceeded CBS, Viacom,

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and Discovery combined. They were spending billions on content, poaching

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showrunners and stars with deals traditional studios couldn't match. At

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a twenty fifteen investor conference, Time Warner CEO Jeff Bukes

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dismissed Netflix as the Albanian Army compared to HBO's premium content.

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The quote would age like milk in the Sahara. That

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same year, Netflix surpassed HBO in subscribers. The Albanian Army

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was at the gates and the kingdom was starting to panic.

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Act two, The Empire strikes back. The moment Bob Eiger

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decided to go to war with Netflix can be traced

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to a single meeting in early twenty sixteen, Disney's strategic

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planning team presented slide showing that kids were watching more

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content on Netflix than on Disney Channel. The room went silent.

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Mickey Mouse was losing to an algorithm, but the real

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shock came when they analyzed the data further. Disney content

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on Netflix was incredibly popular, so popular it was helping

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Netflix beat Disney's own platforms. They were essentially funding their

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own execution. We're selling nuclear weapons to our enemy, one

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executive reportedly said. Eiger, usually calm and measured, was furious

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not at Netflix. Reed Hastings was just doing business. He

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was fury set himself for not seeing it sooner. The

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decision to pull all Disney content from Netflix was made

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that day, though it wouldn't be announced for over a year.

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Eiger needed time to prepare for war, and wars require weapons.

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Disney's arsenal was impressive, but scattered Pixar, Marvel Star Wars

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decades of classic animation, but they needed more, much more.

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In December twenty seventeen, Eiger shocked Hollywood with a fifty

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two point four billion dollar bid for most of twenty

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first century Fox. When comcasts tried to interfere with a

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higher offer, Eiger went nuclear seventy one point three billion dollars,

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one of the largest media acquisitions in history. He wasn't

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just buying X Men and Avatar, he was buying ammunition

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for the streaming war. The Fox acquisition was deeply personal

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for Eiger. Rupert Murdoch had built Fox into a power house,

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but even he saw the writing on the wall. In

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private conversations, Murdoch Toldeiger that competing with tech companies was

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becoming impossible. Better to cash out and let Disney fight

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the war. It was like Churchill handing Roosevelt the keys

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to the British Empire, a recognition that the old world

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was dying. Netflix watched these moves with a mixture of

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respect and amusement. Ted Sarandos, Netflix's content chief and Hastings's

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eventual co CEO, later admitted they knew Disney would be

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their most formidable competitor, but they also knew Disney was

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playing catch up. While Disney was spending seventy one billion

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dollars on Fox, Netflix was spending eight billion dollars a

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year on original content, building a library from scratch. The

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talent wars began in earnest. Netflix signed Ryan Murphy to

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a three hundred million dollar deal, stealing him from Fox

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just as Disney was acquiring it. They gave Shonda Rhimes

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one hundred fifty million dollars, luring her from ABC, Disney's

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own network. The Obama's got a production deal. David Benioff

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and d B. Weiss, fresh off Game of Thrones, got

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two hundred million dollars. These weren't just signings, they were

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declarations of war. Each deal was strategically leaked, the numbers

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inflated in the press to maximum psychological effect. The message

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was clear. Netflix had Silicon Valley money, and they weren't

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afraid to use it. Traditional Hollywood was in chaos. Agents

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realized they could pit Netflix against studios for astronomical deals.

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Writers and producers who'd spent careers begging for pilot pickups

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were getting straight to series orders with full creative control.

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The entire economics of Hollywood was being rewritten in real time. Meanwhile,

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while every traditional media company scrambled to launch their own

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streaming service, NBC Universal announced Peacock, Warner Media prepared HBO

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Max Paramount resurrected CBS All Access as Paramount Plus. Each

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announcement was accompanied by bold projections and promises of exclusive content.

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But there was a fundamental problem with this strategy that

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no one wanted to acknowledge. There wasn't room for everyone.

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Consumers might pay for two or three streaming services, maybe four,

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but seven eight. The math didn't work, but the alternative,

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letting Netflix win was unthinkable. As November twelfth, twenty nineteen, approached,

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Bob Eiger prepared for Disney Plus's launch like a general

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preparing for D Day. Every piece of Disney content was

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pulled from Netflix, classic movies, Marvel series, Star Wars spinoffs,

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all hoarded for the coming battle. The marketing budget alone

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exceeded one hundred million dollars. This wasn't just a product launch.

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It was Disney's last stand Act three mutually assured destruction

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twenty twenty to twenty twenty three. Disney Plus launched with

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the force of a cultural earthquake, ten million subscribers on

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day one, twenty eight million by February. When COVID nineteen

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hit in March twenty twenty, turning the entire world into

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a captive streaming audience, Disney Plus exploded past fifty million subscribers.

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Bob Eiger, who had planned to retire, stayed on to

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navigate the pandemic. In earnings calls, he painted a rosy picture.

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Disney Plus was ahead of all projecttions. The future was streaming.

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The company was transforming itself for a new era. Wall

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Street loved it. Disney Stock hit all time highs, but internally,

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the numbers told a different story. Disney Plus was losing

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money at a staggering rate, over four billion dollars annually.

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Every subscriber cost more to acquire and maintain than they

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brought in revenue. The economics that had sustained Hollywood for decades,

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theatrical releases, cable bundles, syndication, were being sacrificed for streaming growth.

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Netflix faced its own reckoning. For the first time, they

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had real competition. Apple TV Plus launched with unlimited resources.

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Amazon Prime Video started spending seriously on content. HBO Max

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had Warner's entire library, Peacock had NBCs, Paramount Plus had

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well start te treck The streaming buffet was open and

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consumers were overwhelmed. The pandemic accelerated every trend. Theatrical releases collapsed.

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Disney sent Moulan straight to Disney Plus for a premium fee,

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then Black Widow, leading to a lawsuit from Scarlett Johansson

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that exposed the ugly economics of streaming. Warner Brothers went further,

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putting their entire twoenty twenty one slate on HBO Max

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simultaneously with theaters. Christopher Nolan, their most loyal filmmaker, called

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it the worst streaming service and jumped to Universal in protest.

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The talent wars reached absurd heights. Netflix paid four hundred

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fifty million dollars for two Knives Out sequels. Amazon spent

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two hundred fifty million dollars just for the rights to

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make a Lord of the Rings TV series, then another

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seven hundred million dollars producing it. Apple paid two hundred

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million dollars for a Martin Scorsese film that only old

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people watched. The spending was so insane that even agents

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who benefited from the bidding wars privately worried it was unsustainable.

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By early twenty twenty two, cracks were showing everywhere. Netflix

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reported its first subscriber loss in a decade. The stock

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cratered thirty five percent in one day, erasing fifty billion

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dollars in market value. Suddenly Wall Street remembered that businesses

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need to make money, not just grow subscribers. The entire

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streaming sector crashed. Disney lost half its value, Warner Brothers Discovery,

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the unholy merger of WarnerMedia and Discovery, became a penny

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stock reed Hastings, who had always played the long game,

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implemented the unthinkable password sharing crackdowns and an ad supported tier.

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The company that disrupted television with convenience and simplicity was

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now adding friction and commercials. It worked. Subscriber growth returned,

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but at the cost of everything Netflix had claimed to represent.

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Bob Chappek, who had replaced Eiger as Disney CEO, was

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fighting fires everywhere. Park's revenue, which had subsidized streaming losses,

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was still recovering from COVID. The company's woke politics were

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alienating conservative consumers. Florida Governor Ron DeSantis was stripping Disney

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of special tax privileges, and Disney Plus was still bleeding billions.

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In a shocking move, Disney's board fired Chapek and brought

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Eiger back in November twenty twenty two. His first earnings

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call was brutal honesty. Streaming would focus on profitability, not growth.

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Price hikes were coming, content spending would be cut. The

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streaming dream was becoming a spreadsheet reality. Act four, The

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Streaming Apocalypse twenty twenty three to present. The Writer's strike

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began on May second, twenty twenty three, followed by the

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actors on July fourteenth. For the first time since nineteen sixty,

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both unions struck simultaneously, bringing Hollywood to a complete halt.

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The issues were complex, but at the core was streaming.

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Residuals had evaporated, AI threatened jobs, and the economics that

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had sustained middle class entertainment careers were gone. The strikes

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revealed streaming's dirty secret. Nobody was making money. Netflix was

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barely profitable despite two hundred thirty million subscribers. Disney Plus

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was still losing billions. HBO Max had been renamed Just

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Max in a re brand so disastrous it became a

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business school case study. Paramount Plus and Peacock were hemorrhaging

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cash with no path to profitability. David Zaslav, CEO of

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Warner Brothers Discovery, became the face of the apocalypse. He

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canceled finished movies for tax write offs, removed content from

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Max to avoid residual payments and openly admitted that streaming

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doesn't work as a business model. His scorched earth approach

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horrified creatives but thrilled Wall Street. Someone was finally admitting

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the emperor had no clothes. The strikes ended with writers

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and actors getting some wins, but the real victor was reality.

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The streaming gold rush was over. Studios started licensing content

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to each other again, essentially admitting defeat. The great rebundling began,

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with services offering packages that looked suspiciously like cable. Everything

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old was new again, just more expensive and complicated. By

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twenty twenty four, the landscape was unrecognizable. Paramount was for sale,

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with everyone from Sony to sky Dance circling Warner Brothers.

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Discovery was essentially a distressed asset. Disney had survived, but

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a tremendous cost. Eiger extended his retirement again because no

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one wanted the job, even Netflix. The victor was struggling

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with growth, resorting to live sports and gaming to juice

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subscriber numbers. The personal toll was immense. Careers built over

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decades were destroyed in months. Show Runners who'd gotten three

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hundred million dollar deals were unemployed. Studios that had existed

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for a century were shells. The middle class of Hollywood

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riders producers below the line crew found themselves competing for

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fewer jobs at lower pay. Ted Saran, now Netflix's sole

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CEO after Hastings stepped back, was simultaneously the most powerful

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and most hated man in Hollywood. He'd won the war,

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but ruled over ruins. In interviews, he spoke carefully about

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industry transformation and new models, but everyone knew the truth.

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Netflix had broken Hollywood's century old economic model and hadn't

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built anything sustainable to replace it. Epilogue The Kingdom in Ruins.

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As we record this episode in August twenty twenty five,

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the streaming wars haven't ended. They've evolved into a cold

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piece where everyone lost. Netflix won the battle, but discovered

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victory tastes bitter when you're fifteen billion dollars in debt

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and growth has stalled. Disney saved its intellectual property, but

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destroyed its reliable cash flows to do it. The other

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studios are zombies, technically alive but creatively dead. Bob Eiger

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finally retired in twenty twenty four, his legacy forever complicated.

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He saved Disney from irrelevance, but at what cost. The

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company that once printed money from theme parks, cable channels,

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and box office dominance now depends on streaming subscribers who

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can cancel with one click. Read Hastings. Now. Netflix's executive

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chairman gives speeches about disruption and innovation, but privately, friends

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say he wonders if he broke something that didn't need breaking.

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The irony is cruel. Netflix spent twenty years trying to

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become HBO and succeeded, just as the HBO model stopped working.

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The real casualties are the consumers who were supposed to benefit. Yes,

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there's more content than ever, five hundred thousand hours uploaded

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annually across all platforms, but subscription costs now exceed cable bills.

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When you need six services to watch everything, password crackdowns

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and ad tears make the experience worse. The promise of

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on demand everything anywhere has become a maze of exclusive

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windows and disappearing content. For creators, the dream of unlimited

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budgets and creative freedom died with the strikes. The middle

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class of Hollywood. The writers, directors, and producers who created

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steady content for decades barely exists. You're either a billionaire

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show runner or a gig worker. There's no in between.

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The Streaming Wars proved an old truth. When elephants fight,

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the grass gets trampled. Disney and Netflix's battle for supremacy

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trampled an entire industry, leaving scorched earth where a thriving

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ecosystem once stood. They fought over who would control the

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future of entertainment and discovered they'd destroyed it instead. Some

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feuds end with winners and losers. Others end with everyone bleeding.

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The Streaming Wars achieved something remarkable. An entire industry committed

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mutual suicide rather than let one company win, and in

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the end, nobody won. Not Netflix, not Disney, not consumers,

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not creators, just algorithms feeding content to subscribers who pay

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more for less while wondering why nothing feels special anymore.

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The Kingdom struck back, all right. It struck back so

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hard it knocked itself out. I'm Marcus Reid. Thanks for

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listening to feuds, power, pride, and payback. Hey, before you

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go love drama obsessed with rivalries that shaped history, Join

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thousands of fellow drama enthusiasts in our Feuds community on

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Facebook and Instagram. We're dissecting every episode, sharing theories, and

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debating who really won these legendary battles. Just search for

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Feuds podcast or click the link in the show notes.

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Because every great story needs people to tell it to

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until next time. Remember, in business, as in life, sometimes

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the only way to win is not to play.