Plain English with Derek Thompson How Hollywood Drove Its Business Model Off a Cliff
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Jul 19, 2023 
In this engaging discussion, Julia Alexander, a media strategist and writer with Puck News, unpacks the chaos currently plaguing Hollywood. She reveals how the industry’s fixation on blockbusters has led to a financial crisis. From the decline of pay TV to the turbulent impacts of streaming, Julia explains Disney's struggles and the ongoing strikes by actors and writers. She also highlights the battle to adapt to consumer preferences and the future of sports media partnerships, making it clear that Hollywood needs a strategic makeover.
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Cable TV's Lucrative Model
- The cable TV business model was highly profitable, boasting EBITDA margins of nearly 40%.
- Its success stemmed from a socialistic approach where competitors benefited from each other's performance within the bundle.
Innovator's Dilemma
- Legacy entertainment companies faced an innovator's dilemma with the rise of streaming.
- Licensing content to Netflix provided revenue but contributed to the problem.
HBO Now's Churn Problem
- HBO Now's subscriber churn after major shows illustrates the challenge of customer retention in streaming.
- High customer acquisition costs can outweigh revenue, hindering sustainable profit.