2026-07-10 21:04:35
I am so confused right now. I mean that literally. Trying to use the new ChatGPT app on the Mac, I'm confused. I knew this was coming, more or less, and I'm still confused! I hope "regular" users don't try this anytime soon, because it's a mess.
The "good" news is that it's such a mess that simply trying to update the old ChatGPT app, does trigger an update, but it's actually not the new ChatGPT app, but rather an updated version of the old one. So anyone doing a regular update, shouldn't be shoved into this new experience – yet. Instead, to get the new ChatGPT app, you need to manually re-download it from the page on OpenAI's website. Or have Codex installed, because that should update to this new ChatGPT. And that's because the old Codex is essentially the new ChatGPT.
Yes, the "Super App" is here. Unfortunately, it super sucks.
Again, I knew all of this was coming thanks to leaks and just general statements from various OpenAI executives. But somehow I still wasn't prepared. Because I assumed that given OpenAI's solid history of product prowess, I thought this new ChatGPT would just be... better? Instead, it's seemingly just Codex merged with ChatGPT to look and importantly, act, like Anthropic's Claude Mac app.
But the Claude Mac app is also sort of a mess! It's a tangle of toggles and strange UI decisions. OpenAI took the straightforward ChatGPT app and made a mess.
Yes, part of that mess is because it's seemingly no longer a native Mac app but instead a bloated Electron package. I'm not as religious about such things as John Gruber of Daring Fireball is, but, yeah, this sucks, relatively speaking. Electron apps, by their nature, simply aren't as performant as native apps. I understand the cross-development and deployment trade-offs – I was a board observer at Slack back in the day – but OpenAI sort of bait-and-switched us here.1
But to me, the bigger issue is the UI choices.
It took me a while to figure out what was going on with 'ChatGPT Work' – and that was after I watched the unveiling video. I knew this was a new aspect of ChatGPT, but I assumed the "old" aspect would remain as the default here. You know, chat. Having written a post entitled "Chat is dead" specifically about OpenAI moving away from the chat paradigm for ChatGPT, I also probably should have realized this! But I just didn't think OpenAI would make this transition so jarring.
When I see the new ChatGPT app launch into 'ChatGPT Work', I instinctively assume it's an enterprise version of the app. Instead, OpenAI clearly means for 'ChatGPT Work' to evoke 'Claude Cowork', you know the agentic set of Claude tools, but this is insanely clunky branding. As much as people may know Claude Cowork, probably infinitely more think of Microsoft's enterprise suite of productivity tools when they see 'Work'. Or they think of the English language itself. And 'ChatGPT Work' makes it sound like it's ChatGPT to use at work. Like as in your office. As in not for home. Not for personal use.
My god this is stupid branding. It's not bad in the way Microsoft branding is often bad. It's just dumb.
Anyway, my immediate instinct was to click on the 'ChatGPT Work' drop-down and try to get back to 'ChatGPT' itself. But there is no such option. But there is an option: it's to switch to 'ChatGPT Codex'. What the fuck?
I thought that was the whole point of this new app? That Codex was now ChatGPT. But as it turns out, they really wanted to exactly copy Anthropic here. So 'ChatGPT Work' – again, their version of Claude Cowork – is distinct from 'ChatGPT Codex' – their version of Claude Code. Why these have to be different things, I don't know. I mean I think I do know. I think it's so as not to piss off/confuse developers.
At the same time, both OpenAI and Anthropic have been adamant that their coding tools are for far more than developers. In fact, software development may already be a minority use case. So they will clearly be merged at some point. And OpenAI could have taken the lead here, but chose not to. Confusing us all!
Of course, the real confusion stems from the one main thing they're doing differently than Anthropic here: they don't default you into 'Chat'. Let's just pause for a moment to consider how insane it is that a product called 'ChatGPT' doesn't default you into chat mode but instead "work" mode. Again, Claude does default to chat by way of a toggle (where you can switch to Claude Cowork) which is separate from their main toggle (where you switch to Claude Code). That's not great, but OpenAI's UI choice is somehow much worse. 'Chat' got shoved into the sidebar.
Yes, 'Chat' is now a buried sub-menu feature of ChatGPT.
It's below 'New task' (for ChatGPT Work), 'Scheduled' (for ChatGPT Work), and 'Plugins' (for ChatGPT Work). The priorities could not be any more loud and clear.
But crazier still is that clicking on 'Chat' doesn't take you into the good, old ChatGPT chat area we know and love, instead it launches a pop-up box from the bottom of the window. A goddamn pop-up! Yes, I suppose this is a known 'chat' paradigm. But it's one that sucks!
And while you can pop-out the box into its own window (there you are, old friend), there's also a 'minimize' button which doesn't actually minimize the window into some sort of bottom toolbar like you might expect, but instead it just closes the window. You can also move the chat window around in the ChatGPT app environment, which is different from popping it out to move it around (which naturally has its own, different minimize/maximize/close toggles per normal macOS window standards). I mean, what?
But the reason why OpenAI was undoubtedly okay doing all this is even more confusing! Because while it's labeled as a 'task' rather than a 'chat' you can still just chat with ChatGPT in the chat box even when in task mode as you normally would in the old ChatGPT. How's that for a sentence? In other words, as best I can tell, you can use 'ChatGPT Work' just as you used to use ChatGPT itself. The phrasing is all different and confusing "Do anything" is the new "Ask ChatGPT" prompt in the box – I get the sentiment, but come on, "Do anything"?! – but it works.
Okay, that's 1,100 words shitting on this update. I will say something nice: the new model toggle, which is now just a slider for you to indicate where on the spectrum from 'Faster' to 'Smarter' you want to be, is pretty nice. There are still way too many options – six! – but it's better than having to choose a model name/number.2
I'm only a few hours in, but I seriously think that's the only nice thing I have to say about this change. Again, I understand why they're doing it, but I just thought they would do this more gracefully.
Honestly, they're probably a bit trapped. Given the recent success Anthropic is seeing – and the numbers OpenAI themselves are seeing with their own Codex product – they obviously feel the need to make these changes, but given all of the above, they probably should have changed the name from 'ChatGPT'. At the same time, they undoubtedly couldn't do that because they have so much mindshare with it – it's the 'Kleenex' of AI right now. So even though ChatGPT now has little to do with chat, here we are.
Oh yes, and have I mentioned that the new web experience for ChatGPT is entirely different? The web app defaults to, you guessed it – or perhaps not! – 'Chat'. There's a toggle at the top (which is a completely different UI than the Mac app) to move to 'Work'. Not 'ChatGPT Work' mind you, as it is in the new app, just 'Work'. (I suppose they wanted to avoid the embarrassment of having to label the other box 'ChatGPT Chat'.) And yet there is no option for 'Codex' (though presumably that will come at some point, with Anthropic also moving such tools to the web).
It's a cleaner and more straightforward UI – even if the 'Chat' and 'Work' toggle also still make it seem too much like a 'work and play' dynamic. So one presumes OpenAI's assumption is that anyone willing to download the Mac app will be intending to do work – meaning not necessarily actual "work" but instead just general agentic uses. Meanwhile, anyone more casually looking to chat will most likely just use the web. I guess that's fine, but it's confusing, and yes, sucks. Because I would often use the previous version of the Mac app as my go-to always-on chat app (using the option-space shortcut to bring up the nice mini overlay). The new settings area of the new app is so convoluted it's almost Microsoft-ian, if not Facebook-ian in nature.
Speaking of, with these changes, my mind goes back in time to when Facebook rolled out the News Feed. This is that jarring of a change. Obviously, despite the backlash at the time, that ended up being one of the best calls Meta ever made as a company. Perhaps this shift from chat to "work" will be the same for OpenAI. At the highest level, moving beyond simple chat – to voice and other paradigms – makes sense. But it's too convoluted and messy to see it right now.
Bigger picture: I worry that ChatGPT is ceding the consumer AI space. Or worse, that they just intend to take their massive foothold and milk it for needed revenue by shoving ads into our faces. Potentially even more problematic for OpenAI: this is just as Meta and Apple are nearly ready to pick up that potential slack. I already thought that the new Siri AI was going to end up as the default chatbot for many if not most Apple users, simply thanks to its default (and finally "good enough") status. Now I'm even more sure of it because ChatGPT has become such a mess on the Mac.
Let's see what they do – or hopefully don't do – with mobile...
One more thing: Nearly lost in yesterday's flurry of releases is the news that Atlas, OpenAI's not-even-year-old web browser, will also be no more. While it launched to much fanfare last October, the reality remains that it's just an insanely hard area in which to compete, perhaps the hardest, given Google's dominance with Chrome on desktop. I actually quite liked Atlas and would often use it as a secondary web browser (after Dia, still my preferred "AI Browser"). But that was mainly because it was fast relative to the comically bloated Chrome and too-resource-cautious Safari.
As expected, Atlas does live on, in a way, inside of this new ChatGPT app, but good luck finding it! Here's a hint, it's in the 'side panel' which you have to toggle on via a button in the upper right corner of the app. Here, you'll also find the ability to have a "Side task" (which is a concept I like, but come on, "Side chat" was right there!). Atlas, if it's even still called that, is now about as bare-bones as a browser can be and seems mainly to exist for agentic purposes. Which I guess makes sense.
Oh, there's also a 'bottom panel' where the browser and side tasks can reside alongside the Terminal. In a way, the new ChatGPT app is like the new Windows!
So if the goal was for the "Super App" to be the new, convoluted operating system,3 mission accomplished, I guess?
1 Thankfully, it seems that, at least for now, you can have both the old ChatGPT app and new ChatGPT app installed at once – but you need to be careful to rename the old one first because they new one, with the same name, will override it! ↩
2 How will the masses feel about such a change? We'll see! ↩
3 Complete with a hidden away "File Tree"! ↩
2026-07-10 02:43:57
Happy Muse Spark 1.1 Day to those who celebrate. Which clearly includes Mark Zuckerberg, who is seemingly so giddy about the latest work out of his Superintelligence Lab that he's even tweeting for the first time in years. And just as with the first 'Muse Spark' – still a silly name – model, the early results sounds promising. Still not full-on frontier, but inching closer in certain regards like image generation and perhaps coding and some other agentic workflows.1
Anyway, with "Watermelon" – their true frontier model shot – seemingly still growing on the vine, performance isn't really the key today. I mean, a certain level of performance remains table stakes, but there are two other areas to focus on in today's announcement: charging for the API and the price they're charging.
Zuckerberg sat down with Kurt Wagner for Bloomberg to talk about it:
“Since this is not an open source model, this is I think the first time that we’re doing a real serious API,” Zuckerberg said, referring to the application programming interface used to access Meta’s AI. “And the pricing is going to be very aggressive and attractive.”
We've been over Meta's shift from open source – many times – so I won't belabor it, but it is wild just how casually Zuck has shoved it aside given his rhetoric over the past few years. But hey, good leaders know when they need to change direction, even if it's a 180 and makes previous statements seem a bit silly. Far more interesting is the fact that they're charging for the API and again, the pricing.
To the first point, despite endless efforts to diversify their business over many years, Meta's revenue remains completely dominated by advertising. To the tune of something like 98%. As I've noted before, it's a great problem to have – but it's still a problem. And you can tell Meta knows this not only by all the efforts over the years to branch outside ads, but just the efforts in recent weeks to move to sell premium subscriptions (many of which are tied directly to AI usage) and the rumored (but obvious) move to launch a Cloud offering.
This API would be a part of that Cloud offering, so consider it a first step. And it's an important one because Meta is obviously coming very late to this game. So how do you enter such a crowded field? Price:
Meta will also introduce a new Meta Model API system, which will be used to collect fees from developers. Its API pricing is roughly 25% of the cost advertised by other top models from OpenAI and Anthropic PBC. Developers will be able to use Meta’s model for free, but only up to a point; they’ll be required to pay for access after reaching a certain token threshold, Zuckerberg said.
“The pricing from some of the other labs is very extreme and has very high margins,” Zuckerberg said, underscoring that his strategy is to get Meta’s technology in front of as many people as possible. “We think that there’s a real ability to be able to offer frontier or very high-level intelligence at a much more affordable cost.”
Yes, this is Zuck's "your margin is my opportunity" moment, echoing the old famous Jeff Bezos quote.
Now, I assume the AI rivals would all say that they're not being overly aggressive on margin and that the cost is simply what they think can get them to some level of sustainability. Of course, while Anthropic may or may not be close to such a level, OpenAI famously is not. That's why they're raising $122B venture rounds. Mind-boggling numbers which, by the way, still won't be enough to take them to that sustainable level without some major tweaks to their model and/or spend. And Meta just made that a lot harder today.
In a way, it's more like "your lack of an underlying business to support your AI build out is my opportunity". Because, yes, Meta's ads cash machine allows them to execute such a strategy. OpenAI also supposedly wants to drastically cut prices to eat up market share, but again, how are they going to pay for that?
At the same time, Wall Street would also like to know how Meta is going to pay for this. Because as great as the ads business is, at the end of the day, the amount being spent on the AI build out is going to eat into their profits and then some. That's undoubtedly part of the reason why Zuck is throwing them the 'Meta Cloud' bone.
Also, it helps to have full founder control and voting shares and you can more or less tell Wall Street to Zuck off.
But actually, Zuck is also making the case in this interview for why he feels like Meta had to (re)build their own frontier models:
“If you really want to build the best experiences for people, you have to be able to shape the underlying technology,” the Meta CEO said. Controlling the technology is going to let Meta “deliver exactly what we think is going to be the best experience.”
Fair enough, though Apple would argue they're building the exact best experience they want by paying Google to distill their models. So couldn't Meta just have done that or something similar?
Zuckerberg is not convinced that the technology will ultimately become a commodity — that is, that all of the various AI models will essentially do the same thing and be more or less indiscernible from one another. He pointed to Mythos, the latest model from Anthropic, which raised national security concerns in the US, as an example of how companies are already gatekeeping aspects of the technology instead of sharing it widely.
“The capabilities are not actually getting diffused or made broadly available to everyone,” Zuckerberg said. “Anthropic is sort of keeping a model for themselves and releasing a kind of simpler version of a model. And there are all these reasons for why they may or may not be doing it. But that at least does not suggest to me that the world is either heading in, or is guaranteed to head in, a direction where this ends up being something that is widely available.”
In other words, if they relied too much upon someone else's models, Zuck knew they would run into the situation where those models could go away for any number of reasons. While perhaps no one thought it would be the US government who would pull them back, the point stands. Zuck has years of scar tissue from being beholden to Apple (and to a lesser extent, Google) in mobile. He wasn't about to let someone do it to Meta in AI. Costs be damned!
Wall Street should probably appreciate that. But won't. But they will appreciate charging for the API – even if it means undercutting prices – because of what it signals: the potential for a more diversified Meta and one that may yet figure out how to pay for that AI build-out...
One more thing: Of all the juicy Zuck quotes, this must be the most succulent:
“That is a pretty interesting milestone because I think this may be the first time, at least that I can remember, that Meta’s models are better than all of the Google models,” he said.
Ouch! You think this is being passed around Mountain View today?
1 That's assuming we can trust the numbers that Meta is putting out there which, after the Llama 4 debacle, we should probably still wait for these to be verified by others. ↩
2026-07-09 19:44:09
Last night, I had a 20-minute conversation about black holes. I'm not sure I've ever had such a long conversation about these celestial bodies before simply because despite having read several books on the topic, I've never found myself around anyone who I thought would want to converse in such things. And it wasn't just a fact-based back-and-forth, but more of an actual discussion about more nebulous concepts and ideas. Most importantly, the conversation was natural. As we got into it, it felt like we found a flow in our cadence of speaking. I say "we" but of course there was only one human being involved in the chat. The other entity was ChatGPT.
I have long thought about and written about the notion of interacting with computers using voice. Since I was a kid convincing my parents to buy expensive dictation software and microphones, this always just seemed like the way we would eventually interact with machines – and this was before I really started reading or watching science fiction. It's just obvious, right? In the era long before text messaging came to rule the world, the way we chatted with human beings wasn't via text, it was via voice. Sure, there were letters and the like, but that was more or less a hack to let your words travel long distances, or to the masses, before we had a way to transmit voice.
Obviously, there are upsides to using text. Many of them. And obviously it started as not just the dominant way to "speak" to machines, but the only way. And to this day, it's still the primary way. Depending on the workflow, it can be more efficient. But not always. And again, it was a system we came up with because there was really no option to get machines to "hear" let alone understand voice inputs back in the day. And the output back to you was another matter entirely.
But we're here now. Machines all around us can hear now.
AI, of course, was the missing link in all of this. Back when we still called it "ML", voice recognition finally got good enough for most dictation tasks. But the true "understanding" and ability to reply back to you took the LLM breakthroughs. I first wrote about this aspect just over two years ago when OpenAI rolled out GPT-4o – their first true "omni" model. But again, this was just a continuation of concepts that I was writing about a decade ago. Because again, I had been thinking about this stuff since I was a kid.
So naturally, I've had some real confirmation bias here and it has taken longer than it seemed for vocal computing to go truly mainstream. Yet slowly but surely, it is happening. You see it more and more in the streets and in offices – including, increasingly, doctors' offices – people dictating things to their phones. But despite 15 years worth of promises from Siri and later Alexa, true back-and-forth – actual conversations with a computer – have been lacking.
Some of it is cultural and societal, we've all grown up in a world where the primary input for computers – including smartphones – is text. But the bigger part has remained technical. It was still simply more efficient to use text for most tasks because you couldn't be sure voice would always work. Or voice just wasn't an option for many things. But mostly, it just wasn't natural. A back-and-forth with an AI chatbot was still just exactly that: a back and forth. You spoke and then had to wait for it to respond. Yes, the services starting with GPT-4o hacked together ways to allow you to interrupt to try to speed up interactions, but that often just confused both sides. With GPT-Live, it feels like we're finally overcoming this hurdle, allowing for a truly natural conversation with a machine.
The key to this is what OpenAI describes as a "full-duplex" architecture:
GPT‑Live is built on a full-duplex architecture, meaning it can listen and speak at the same time. During conversations, GPT‑Live can show it’s paying attention with phrases like “mhmm” or “yeah”, engage in quick back-and-forth, or just stay quiet when you need a moment to think. The result is a voice experience that is refreshingly easy to talk to.
And whereas before the voice models were different from the text-based models, now the vocal AI can pull from the same best models when responding.
In my experience over the past day of usage, it's still not perfect – there's too much of those "mhmms" and "yeahs" (which, one presumes, is not just about sounding more natural, but also buying some time to process – the draggggged out "let me checks" – which is a trick that humans leverage as well, of course!), but you can see – and hear! – a world in which this is perfected. Will it be exactly like talking to a human? Probably not, but would we even really want that? I mean, I'm sure some people would for certain use cases, including combating loneliness. And I'm sure services will perfect products and models for such use cases. But I actually quite like talking to a computer, knowing it's a computer, but still leveraging our natural and awesome speech capabilities as humans.
So, in my black hole conversation, I can push GPT-Live deeper and deeper down rabbit holes, whereas in a conversation with a human, this might be weird – or even pushy! And unlike with a human, I can take the conversation anywhere, because these machines have knowledge corpuses that know no bounds, quite literally. Forgive my French: that is fucking awesome.
Sure, it has long been awesome – perhaps the main awesome thing about LLMs in general. But there's something different that unlocks, at least for me, when I use voice to do this. Again, it just feels far more natural.
Yes, yes, there are concerns that what the machine is telling you isn't fully accurate. But actually, there are far greater concerns in this regard in conversations with humans! Great strides have been made in "hallucinations" over the past couple of years, but you should probably still retain some level of skepticism. Especially since, the flip side of the natural element of voice is that when something is said verbally with great confidence, you're naturally more inclined to trust what you're hearing. And AI has historically been the ultimate bullshitter. But again, people are guilty of this too!
Anyway, it feels like we're now fully on the cusp of a true shift in computing. Yes, I've long thought this, but it's step-by-step happening. And these new GPT-Live capabilities seem like they're going to unlock the space to the point where new devices may now be not just possible, but inevitable.
For now, these models and capabilities will be awesome to use on smartphones and laptops. While one aspect of the demo that Siri head Mike Rockwell gave during the WWDC keynote was undoubtedly because voice gives a far better demo than text, it also seems pretty clear that we're about to see millions of people out in the wild hitting a button to chat – vocally – with Siri. Finally.
And perhaps those who get really into this method of interaction start to venture into even more robust models such as those offered now by GPT-Live. And perhaps OpenAI leverages those capabilities to launch their own device sometime in the next several months. And perhaps many others follow suit once it's clear that this is a new path forward for computing.
As I always note in such posts, I'm not saying voice is the be-all-end-all of computing interaction. But I'm saying it's going to slot in as a new, more natural form of working with machines – much like Apple ushered in the more natural touch capabilities with multi-touch with the iPhone two decades ago.
My kids, who have grown up talking to Alexa to play music and get the weather are instinctively going to understand this new world in ways we cannot. That's exciting. And natural. They'll be able to go down rabbit holes talking about black holes or anything else they can possibly imagine. And they'll do so the same way they talk to people, with their voice.
2026-07-08 17:34:12
OpenAI is not building a phone. Amazon is not building a phone. And now SpaceX is not building a phone. Are you sensing a trend?
The trend is that basically the entire tech industry is rumored to once again be building their own smartphones. But they're all denying it. But all of the denials sound misdirecting at best and misleading at worst. Because of course they should be building such a device. As should Meta (again). And Microsoft (again). And everyone else who aims to control their own destiny. Because right now, Apple, and to a lesser extent, Google, does. And that's going to continue, perhaps well into the Age of AI.1
So the argument is really one of semantics. OpenAI isn't building a phone, they're building... something else. Amazon isn't building a phone, they're building... something else. SpaceX isn't building a phone...
2026-07-07 17:29:48
Move over Jensen, there's a new profit king in town. Well, in South Korea.
It was just six weeks ago when NVIDIA (once again) reported blockbuster earnings to the tune of $53.5B in operating profit in a single quarter. I had AI use some NVIDIA chips to figure out that this was an all-time record for such profit in corporate America,1 beating out even the longtime profit king, Apple.
Well, that record didn't last long – and again, didn't stay in America. Here's Daisuke Wakabayashi and Jason Karaian reporting for The New York Times:
Samsung Electronics said that its latest quarterly operating profit was nearly 20 times higher than last year’s, spurred by a seemingly insatiable demand for memory chips used in data centers for artificial intelligence.
The preliminary results for April through June, announced by the South Korean tech giant on Tuesday, underscore how the staggering investments that companies are making to build computing infrastructure for A.I. continue to propel earnings for memory chip makers to record levels.
Samsung said it generated an operating profit of 89.4 trillion South Korean won, or roughly $58 billion, in the second quarter. That was well above the 4.7 trillion won it earned in the same quarter last year, and more than it earned in 2024 and 2025 combined. The company’s revenue also more than doubled in the quarter, to about $112 billion.
No, that's not a typo, let alone many of them. Samsung's operating profit jumped almost 20x year-on-year. $58B. More than it earned in 2024 and 2025, combined.
Crazier still, it could have been more! From the Reuters report on the numbers:
Samsung posted better-than-expected earnings despite bonus-related provisions, as memory prices rose sharply," said Lee Min-hee, an analyst at BNK Investment & Securities.
Without those provisions, its operating profit would likely have exceeded 100 trillion won, analysts said.
100 trillion won is over $65B.2
Yes, per South Korean market reporting norms, the numbers are preliminary (with final ones due on July 30). Still. As recently as 2023, Samsung had reported $5B in operating income – for the year. Yes, this one quarter is over 10x all of 2023. Of course, that year was an outlier. Why? Memory chips! It was a downturn in that market – just three years ago – that ate nearly all of Samsung's profit. Now, of course, it's those very same chips which are fueling these incredible numbers.
Outside of 2023, normally Samsung makes between $25B to $50B a year in operating profit. Again, they just topped that in a single quarter. Because whereas Samsung used to be a consumer electronic company – and like Apple, mainly a smartphone company – now they're mainly a memory chip company.
If Apple has spent the past 20 years trying to figure out what, if anything, can move their fiscal needle after the iPhone, well, Samsung stumbled into it!
And I do mean stumbled because up until very recently, their chip division was a massive problem for the company. They simply could not compete with the likes of TSMC as a fab and SK Hynix on memory. Now, thanks to massive supply constraints, all three are amongst the most valuable companies in the world.3
Maybe, just maybe, Apple should get more into the chip business? They are for themselves, of course. But that doesn't make money (at least not directly) as much as it saves them money (and yes, helps to differentiate their products). Imagine if Apple had a memory chip business? I'm sure Tim Cook wishes that was an investment he had made a decade or two ago right about now...
Of course, the business will undoubtedly bust again at some point. And even with these incredible numbers, Samsung's stock is actually down around 10% at the moment because analysts were expecting even larger numbers! So there's probably no champagne at Samsung today despite these results – especially lest someone think the cork pop is the sound of the AI bubble bursting.
1 And I note "corporate America" simply because Saudi Aramco muddies this picture a bit – specifically one quarter in 2022 when the war in Ukraine led to an oil price spike that boosted their operating profits to the moon – perhaps to nearly $100B. Of course, much of that money immediately flows back to the government, so it's a... different world. ↩
2 Is that employee profit share agreement about to be renegotiated again? ↩
3 To be clear and fair, Samsung's fab business is still somewhat problematic, and perhaps lost money in this incredible quarter due to the aforementioned bonus payouts. But it's without question a good strategic business for Samsung to be in at the moment. Just ask Intel! ↩
2026-07-06 18:16:38
Is Netflix in trouble? That's sort of the question underlying Shaw's post above. He's quick to note that it's Netflix, and history has proven time and time again that you can't count them out because they're good at figuring out what's next to keep going. But it seems pretty clear that it's time to shake things up again.
Netflix shows have historically delivered their biggest ratings in the first season. Unlike broadcast TV programs, which often peaked in the middle of their run thanks to word of mouth, Netflix shows have lost viewers over time.
Yet the sharp drop in viewers is a major source of concern for the company, which has been studying its data to figure out why this is happening, according to people familiar with the matter. The service is ending The Night Agent after its next season. It renewed two comedies, Running Point and The Four Seasons, even though both shows surrendered more than 50% of their audience from season one.
To me, there are a few obvious problems here. The first is that a lot of the content just isn't very good. Yes, this is subjective. And yes, this quality concern has long been the case with Netflix – to the point that they have multiple times come out and said that they would start focusing on quality, not just quantity. And yes, none of this has really mattered in the past as Netflix growth continued unabated. But that didn't mean it would never matter. With streaming options maturing and rising in price, the others are getting pretty good at narrowing in on their niches and focusing on quality. Netflix remains the sort of fall-back must-have option, but it's increasingly seen as filler content. It's sort of like basic cable versus the premium cable of old.
To make matters worse, YouTube is coming fast and furious to take this market. Thanks to their nature – UGC content amassing eyeballs to the point where everyone feels like their content must be there in some capacity – they're simply better at it than Netflix. They're infinitely better at scaling content and so it matters less if it's a ton of garbage – there are plenty of gems too. Because there's just everything! YouTube is really out-Netflixing Netflix.
In other words, Netflix is getting squeezed. Both from the top from better quality streamers like HBO Max, Disney+, and even Apple TV. And now from the bottom with YouTube – not to mention all the FAST services.
Buying HBO Max by way of buying Warner Bros would have obviously helped with this problem. But it didn't happen. So again, it's time to re-think the strategy here. Maybe they actually – actually – focus more on quality and start to cut the crap. But it's also bigger than that.
The second issue I believe is tied to what has historically been their strength, their calling card even: the binge model.
Obviously it has worked out well for them – to say the least! – but I'm not sure it's working any longer. I've long thought it might be time to re-think this model – not necessarily abandoning it, but tailoring it for certain releases. For example, maybe a first season is released binge-style to get people hooked, followed by a more "traditional" second season that builds week to week. Or maybe you do what other streamers have long done in releasing the first few episodes to get people hooked then switch to week to week. There are just so many options here.
The "second season problem" Netflix seems to have suggests that one solution may be to do a first season binge (or partial binge) follow fast by a second season. In other words, get two seasons in the can at once. But that would be an expensive proposition, of course. Still, if you have a good sense of what will work for the audience, you could do it for some shows. But again, that sort of goes back to quality. And the issue remains that Netflix may be increasingly misreading their room.
Tangential to this, I do think that because Netflix releases so many shows, there's a inherent fear that some will (necessarily) not get renewed. This leads to a natural reluctance to commit. Again, less would be more here.
I continue to think the bigger shift should be shaking up distribution entirely. Some content goes to streaming but some goes to theaters. Some is binge-able, some is episodic. Some goes from a streaming show to a movie and others go the other way. Again, there are so many options here. But Netflix needs to leverage more than simply binge streaming. They're starting to with the shift to live and yes, the thawing stance on theatrical. But they should go all-in on this shake-up.
The path to $1T isn't paved with streaming alone. Obviously.1
In the past, Netflix has been insistent that the binge model works because their data doesn't lie. But the data may deceive. It could lead to content that people may get something out of but ultimately don't care about. The one-night-stand of shows, as it were. Data aside, it was impossible to argue with their growth. But suddenly, it's not so impossible, it seems!
1 I mean, should they buy Disney before Apple can? Hollywood would throw up at the thought, of course. But their throwing up on the Warner Bros deal likely just made things worse for the industry in the long run... ↩