2026-01-19 21:16:44
This week was supposed to be the deadline for Warner Bros Discovery shareholders to tender their shares in support of Paramount Skydance's (hostile) bid for the company. Paramount clearly doesn't feel great about the proposal (after losing a fast-track bid to get more information on Netflix's offer for Warner Bros) so they're likely pushing out the date (again). At the same time, Netflix reports their Q4 earnings tomorrow and alongside that, they could formally switch their bid to be an all-cash offer, more closely matching Paramount's structure. The fight continues...
But in some ways, the fight is almost aside from the larger point. That is, Hollywood hates both of these deals. Because they don't want to see one of their iconic studios acquired. That is a foolish stance that would ultimately hasten the decline of Warner Bros and eventually lead to its demise.
Those are the real stakes here. Which everyone outside of Hollywood seems to realize, and yet few inside of Hollywood do.
I've made this point a number of times around this deal, but I felt the need to more clearly spell it out. Because every day brings a new headline or interview which makes it clear that Hollywood is living in a dream world. Regardless of who Warner Bros ultimately moves forward with, they're hoping for regulators to step in to block the deal. Again, it's silly. No, it's stupid.
If no deal happens and Warner Bros Discovery moves forward with splitting off their cable assets later this year, it will leave the studio extremely vulnerable. While the newly spun-out Discovery assets would assume a lot of the debt that lingers from the previous deals the company made – notably the tie-up with Discovery itself, unburdening previous parent AT&T – it would also take about half of the profit that the currently combined company makes. Warner Bros, the studio, is coming off a banner year. If next year is less "banner", there could be some real problems there...
But even if the studio and HBO Max keep performing, this remains a relatively small company that's going to have vultures circling to swoop in. And, in fact, an acquisition was the entire point of the spin-out. CEO David Zaslav wanted to make Warner Bros a more attractive target to deep-pocketed buyers. Knowing that, Paramount, also a relatively small company – far smaller than WBD, actually – pre-empted the spin-out. It was simply the only way they could compete for the company. But they undoubtedly didn't anticipate this level of interest from Netflix. Or that WBD would agree to a deal for just the studio ahead of the spin-out.
Anyway, the point is that someone is going to be buying Warner Bros. This was always the plan, and killing these deals just removes two would-be suitors – suitors who, by the way, actually have interest in making movies (and television). Without these two around the table, the remaining would-be acquirers, are either going to be Big Tech or private equity. Is that really what Hollywood is hoping for here? A private equity deal that reeks of "synergies" and cost-cutting galore, to set the studio up to likely flip again down the road? A real Hollywood ending.
Of course not. But they're living in this fictional land where they think Warner Bros will continue as a stand-alone entity. That's not reality. That's not happening. So to beat the dead horse: if these deals don't happen, someone else buys Warner Bros. And it will likely be a buyer far less interested in the future of Hollywood.
But, but, but Hollywood will retort: Netflix is killing Hollywood. Are they? When I look at Netflix, I see a company that is always one step ahead of inevitable curves in media creation and consumption. Hollywood won't like that framing because filmmaking is an art form. I don't disagree, but it's also a business. And it is a business that is always morphing. And it is an industry that is always filled with existential dread about those changes.
What Hollywood should be worried about is finding the right type of buyer for one of their major movie studios. And it sure feels like Netflix checks just about all the boxes to be the best possible buyer here. They're big, popular, profitable, and innovative. But this last bit scares Hollywood because again, they're worried that Netflix will turn all movies into streaming content. The dreaded 'C' word.
That's why Netflix CEO Ted Sarandos is on his charm offensive, making increasingly declarative statements that this will not happen. That they're committed to making Warner Bros work as-is – including with theatrical releases. No one in Hollywood believes him, and that's almost reasonable given his previous statements and Netflix's previous stances. But as I've predicted well before this deal, Netflix was always going to change their tune there. Again, they're both smart and innovative. This isn't a $400B media company – twice the market cap of Disney, by the way – on their way to the first $1T media company, because they don't know what they're doing.
You cannot say the same of every other entity that has bought a movie studio.
And that's the thing, this is not some new existential threat for Hollywood. The studios started consolidating or getting scooped up almost a century ago. To the point where only Disney remains a stand-alone entity – and that's largely because they've created (or bought) other businesses to augment (and support) the studio. Many of the studios have changed hands, usually amongst conglomerates, multiple times.
With that in mind, it's rather insane that Hollywood opposes a deal here.
Is Netflix (or Paramount, for that matter) going to continue doing things exactly as Warner Bros has in the past? Undoubtedly not, but other parents of Warner Bros in the past have changed strategies multiple times as well. With Netflix, there's a least a shot at some innovative new approaches and strategies.
This past weekend, I watched The Rip, the new Matt Damon/Ben Affleck movie that debuted on Netflix. Yes, on the streaming service, not in a movie theater. But that was undoubtedly the right call because the movie undoubtedly would not have been a huge hit at the box office. It may have done okay on the back of its stars, but it was never going to be a blockbuster. It's just not the type of movie that fits that mould these days.
Hollywood hates that too, but again, it's reality. And it has long been the reality of the theatrical business. It's a business mostly driven by the big-budget giant tentpole movies and augmented by some breakout hits with far more modest budgets. The Rip is neither. With a budget reported to be around $100M, it would need to make around $200M at the box office just to break even (after the theaters take their cut). That was not going to happen.
But on Netflix, a movie like this can be a hit. It's a movie with known stars that the service can serve up to their members who are most likely interested in such fare. And, in fact, for the first time, Netflix is allowing a movie to be aligned with becoming a hit, financially. Damon's and Affleck's Artists Equity production company got Netflix to agree to pay a bonus to everyone working on the movie if it hits for the service. We don't know those exact metrics and terms, but it's a big deal for Netflix as historically, they've not done any sort of "backend" deal – in part because those have historically been based around box office results, which again, Netflix hasn't historically had in any meaningful way. That probably changes with the Warner Bros deal, but again, even this deal is slightly changing the stakes and structure.
And that should lead to more movies on Netflix taking chances – and hopefully leads to better content.1 Which, yes, is subjective, but has long been hung around Netflix's neck with their films in particular.
Now, the counter to the above would be the other bit of news coming out of Damon/Affleck with regard to Netflix: that the studio pushed them to make structural changes to The Rip that would result in people sticking around early (i.e. not burying the big action in the second and third acts), but also to keep reiterating the plot in dialogue for the viewers who may be watching while on their phones.
I'll pause while Hollywood collectively pukes in their popcorn here.
I tend to think the emphasis should be on making movies (or shows) that are gripping enough to rip people off of their phones – a point which Affleck makes as well in their interview with Joe Rogan, where the above idea is discussed.2 But this is also about the current reality: a lot of people who watched The Rip this weekend did so while on their phones. Netflix is simply aiming to play the game on the field, as it were...
Anyway, I'm too in the weeds now. The point is that Netflix is the one company best poised to succeed in the future of Hollywood. At least right now. And the fact that they're trying to buy one of the major studios should be viewed as a very good thing for the industry, not a bad thing, let alone the end of the world. Because the alternative is probably private equity buying the studio if one of these deals doesn't happen.
Good luck with that, Hollywood.
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 I thought The Rip was decent. A bit better than the typical bland "okay" movies on Netflix, but still not great. In particular, there are some real plot problems in the third act. To me, it would not have been worth the the time and money to go see it in theater, but it was a solid Netflix watch! ↩
2 Alongside Affleck's interesting points and thoughts about AI! ↩
2026-01-19 06:38:46
Wait a minute. You mean to tell me that Chuckie Sullivan might be Will Hunting when it comes to AI? I mean, can we just dive a bit into Ben Affleck's comments on The Joe Rogan Experience – I know, I know! – last week?
Rogan tees up the question around films potentially being written by AI – "it gets weird, right?" To which Matt Damon defers to Affleck as "an area of expertise for him." Okay, I'm intrigued, let's see what you got, Ben!
After a comparison to electricity – not the worst analogy, one that others have used in talking points before,1 though not particularly useful here, we get to the goods:
What I see is if, for example, you try to get ChatGPT or Claude or Gemini to write you something, it's really shitty. And it's shitty because by its nature it goes to the mean, to the average. It's not reliable. I mean, I just can't even stand to see what it writes.
Rattling off the three key AI products at the moment? Check out the big brain on Ben! The point about writing to the "mean" is fine. It's too dismissive of the interesting things such tools do produce, but for the most part, as a writer, I don't disagree. The point about being "not reliable" – presumably he's referring to hallucinations here – seems less relevant to writing a movie script, but we'll allow it.
It's a useful tool if you're a writer and you're going, "What's the—I'm trying to set something up where somebody sends someone a letter but it's delayed two days..." and it can give you some examples of that. I actually don't think it's very likely that it's going to be able to write anything meaningful, and in particular that it's going to be making movies from whole cloth. Like Tilly Norwood. That's bullshit—I don't think that's going to happen.
Yes, it's a tool that can be useful. Agreed. I disagree about being unable to write "anything meaningful" but that's obviously subjective. But I do agree with his bigger notion about not being able to make "movies from whole cloth". I think technically it will happen – obviously – but I highly doubt they'll be things people want to watch beyond the novelty value. Also, I appreciate the passion.
I think it turns out the technology is not progressing in exactly the same way they presented it. Really what it is going to be is a tool. Just like visual effects. And yeah, it needs to have language around it. You need to protect your name and likeness. You can do that. You can watermark it. Those laws already exist. I can't sell your fucking picture for money—I can't. You can sue me. Period. I might have the ability to draw you, to make you in a very realistic way, but that's already against the law.
Mostly agree. Again, I think it's going to be one tool in the tool belt of future filmmakers, and I wish more would recognize this rather than being fearful of it outright. Overall, Affleck seemingly has the right framework here, though he's brushing aside the idea that some people might want to leverage AI to use their likeness. Maybe not the Ben Afflecks and Matt Damons – or Matthew McConaugheys – of the world, but those who are trying to breakthrough and/or want to get paid. This will eventually includes stars as well, just as has become the norm with television commercials – which used to be relegated to markets in Asia. There will be a sort of NIL marketplace for Hollywood.
And the unions—I think the guilds are going to manage this. It's like, "Okay, look, if this is a tool that actually helps us—for example, we don't have to go to the North Pole, right? We can shoot the scene here in our parkas and then make it appear very realistically as if we're in the North Pole. Save us a lot of money, a lot of time. We're going to focus on the performances and not be freezing our asses out there and running back inside." That's useful.
Just like Spencer Tracy and Katharine Hepburn used to be driving their car and there's wind blowing a painting behind them and it looked goofy. Now people use a lot of computer-generated stuff. Some of it is going to replace just that—instead of 500 guys in Singapore making $2 an hour to render all the graphics for a superhero movie, they're going to be able to do that a lot easier.
Yes, that is useful and pragmatic. Not just to save money – though that's obviously a huge part of it – but also to save time and perhaps do things with film that just aren't feasible. How much the unions have to do with that... we'll see. But again, I appreciate this rational stance in a time of irrational stances!
There's already laws and guild guidelines around how many union extras you have to use. But also, we've been tiling extras. There weren't a million orcs in Middle Earth, you know what I mean? In Invictus, there weren't all those people in the stadium. That's something we've been doing.
Yep. Good. Appeal to the nerds. Appeal to Matt Damon. Check. Check.
It kind of feels to me like the thing we were talking about earlier where there's a lot more fear because we have this sense of existential dread—it's going to wipe everything out.
But that actually runs counter, in my view, to what history seems to show, which is that a) adoption is slow. It's incremental...
Yes. Very good. Displacement of jobs will (unfortunately) happen, but it's not going to happen overnight and it's not going to happen across the board in Hollywood. And the new technology will ultimately lead to new jobs that currently don't exist. As Affleck notes, this is the same story as with all technological revolutions throughout history.
I think a lot of that rhetoric comes from people who are trying to justify valuations around companies where they go, "We're going to change everything in two years. There's going to be no more work."
Well, the reason they're saying that is because they need to ascribe a valuation for investment that can warrant the capex spend they're going to make on these data centers, with the argument that, "Oh, as soon as we do the next model, it's going to scale up, it's going to be three times as good."
"CapEx"? Be still my heart! Data center spend? This is an actor, right?
The point is a bit too dismissive/flippant about what the tech companies are trying to do. This isn't all some Ponzi scheme – though some of it undoubtedly is! – to try to trick people (mainly investors given what Affleck is referring to here), it's insanely fast-moving (and growing) technology, and everyone is trying to put themselves in the position to "win". From the perspective of most of these companies, at least given our current moment in time, it's rational. Unprecedented, but still rational.
Except that actually ChatGPT-5 is about 25 percent better than ChatGPT-4 and costs about four times as much in electricity and data. So that's plateauing. The early AI—the line went up very steeply and it's now sort of leveling off. I think it's because, yes, it'll get better, but it's going to be really expensive to get better.
And a lot of people were like, "Fuck this, we want ChatGPT-4." Because it turned out the vast majority of people who use AI are using it as companion bots to chat with at night and stuff. There's no work, there's no productivity, there's no value to it. I would also argue there's also not a lot of social value to getting people to focus on an AI friend who's telling you that you're great and listening to everything you say and being sycophantic. But that's sort of a side issue.
Technically, it's 'GPT-5' and 'GPT-4', which are models running in ChatGPT, the service, but we'll let it stand. I'm more impressed he knew the version numbers and the high-level complaints OpenAI faced in switching between those two models.
As for "the vast majority of people" using AI as companions, this feels a bit too headline-y. As does the "no productivity" and "no value" stuff. It's too dismissive. But he is generally correct in the notion of more compute (and more money) needed to keep scaling as the low-hanging returns taper off.
For this particular purpose, the way I see the technology and what it's good at and what it's not—it's going to be good at filling in all the places that are expensive and burdensome and make it harder to do things. And it's always going to rely fundamentally on the human artistic aspects of it.
Okay, good, we're back on track. Agreed.
At this point, Joe Rogan jumps in:
Well, I think the more it becomes ubiquitous, the more people are going to appreciate real things that are made by real people.
Holy shit, I fully agree with Joe Rogan on something! I've written about exactly this notion a number of times now. He talks about tables and Claire Danes, okay sure, but yes! In a way, we're going to shift from caring more about the output, to caring more about the input. The time someone – a human – put into doing something.
One more thing: as some folks have pointed out in replies on social media, this isn't the first time Affleck has waxed poetic on this topic. I like "craftsman is knowing how to work, art is knowing when to stop." – a variation of a quote by Toni Morrison (and others). But I also like his immediate and intimate knowledge of Succession!
Also, how about 20+ years ago when he laid out what Spotify and Netflix would become...
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 Of course that's your contention, you're a first year AI student. You just got finished listening to Andrew Ng's lecture on why "AI is the new electricty"... I kid, I kid, but come on, this is a scene in a movie you wrote – a scene you're in! You know, the very scene from where my title comes from... ↩
2026-01-18 04:55:55
The ads are coming! The ads are coming!
Look, everything in OpenAI's blog post announcing that advertising is coming to ChatGPT seems reasonable. Fidji Simo smartly frames it as wanting to ensure they can bring their AI to more people, but at the same time, as everyone is well aware by now, it costs a lot of money to do that. Charging for more/better/faster access has worked well to date for the company, but that model will never be able to scale the way 'free' and/or 'cheap' can. It's a story as old as time – or at least, as old as advertising. Sam Altman may have said that he hoped to avoid this fate – "a last resort" – but it was always inevitable. You either die as an ad-free service or you live long enough to become an ad vessel.1
That's a bit unfair. But it's directionally true. And it's exactly why you hire someone like Simo to be the CEO reporting to the CEO. She has all the experience to make this work for OpenAI, not only thanks to her Meta days, but her Instacart days as well. She has been able to help get advertising working across several different types of businesses (and I think Instagram should be considered slightly different from Facebook itself – we'll get to that).
So, will this work for OpenAI?
I mean, the short answer is that it has to. Given the costs involved and the competition keeping pricing in check, this will be the only way to scale to billions without breaking the bank – which still might break, even with ads, by the way. The problem is that OpenAI clearly doesn't yet know how it will work. Because no one does. It's a new product and new type of experience – and my guess would be that to truly work, it will require a new type of advertising.
Google is the Google you know today because they figured this out. Meta is Meta because Facebook – and again, later Instagram – figured this out.
Conventional wisdom right now would suggest that the right ad model is going to be closer to that of Google because much like Search, what you type into a text box is key. And much like with Google Search, such text often indicates an intent of some type. But whereas Google aimed to match this intent with a website – well, at first, at least – ChatGPT tries to get you right to an answer. This is a problem for the Google-style of advertising because that was predicated around the notion of a click. Famously, because it's trying to get you the information directly rather than linking to a site that has the information, there are far fewer clicks on ChatGPT.
But Google's model was even better than that. Because a user was trained to know they'd be getting those famous "10 blue links" back as a result, they were also trained to quickly scan them. Sure, Google would try to surface the one it found most relevant to your query first, but with millions then billions of web pages and an infinite pool of queries, it wasn't reasonable to think that the top link would always be the correct one. That naturally let Google "take over" one of those link slots for an ad unit, knowing the "impression" would be there.
Even better, they could move such a unit to the top of the results without too much damage done to the product. Is the ad not what you were looking for? Then just don't click. But even better still, for certain types of queries, the ad often was what you were looking for, because the real genius and killer feature of the model was getting basically all businesses to advertise against the keyword queries related to their businesses – and to those of their rivals! As a result, when I search for "iPhone" the top result is often an Apple ad that Google gets paid to display. Because if not, Samsung would try to control that top slot and may divert a customer with clear smartphone interest to their Galaxy lineup.
Everyone knows all of this, of course, but it's worth spelling out just how brilliant this is. It's not an exaggeration to say that it may be the best business model in history. But it's also one that breaks down quickly without those clicks.
Now, ChatGPT is clearly making product tweaks to lead to more clicks. Conversations around shopping are the most clear example of this. Because at the end of the day, you can talk all you want about buying something, but if you actually want to buy it, you're going to have to click somewhere to go do that – even if it's within ChatGPT itself (which is what they're working on, obviously).2
Anyway, anything with some sort of purchase intent is clearly going to get more click-inducing UI tweaks. This isn't necessarily a bad thing, but it will also help the advertising push. Yet it still feels like that won't be the big breakthrough here. And certainly it will never convert as Google Search ads have. I'm more intrigued by OpenAI's notion that you might want to chat with an ad. On the surface, this sounds gross, but it's perhaps a clever way to integrate ads more natively into the product. Want to know more about the iPhone's specs versus that Galaxy device? Maybe Apple pays to sponsor ChatGPT's answer (without any oversight of the response aside from insuring it's accurate?) with a link to buy. And maybe Samsung pays too for their own link, just in case you deem that the better path.
Travel. Tickets. Etc. The categories will undoubtedly be the same, but the key will be not destroying user trust in the chat by letting advertisers turn said chat into a giant advertisement. ChatGPT is saying all the right things now, but... such things have a way of morphing over time. Bending towards the arc of more monetization...
But all of the above is too obvious. The more interesting ads may be simply about information, the native content of ChatGPT. Can they figure out a way to get advertisers to pay to sponsor relevant information – again, not spammy/pitchy – in response to "regular" chats? Is there some sort of new "cost-per-information" model?3 Or if a user engages with it, "cost-per-interaction"? There obviously needs to be some sort of signal to showcase that it was useful to a user and again, it may not be a click. Otherwise, we're just back in the less interesting, and probably less useful, not to mention less lucrative, impression game.
Speaking of, Meta has historically played that game better because their breakthrough, the feed, is naturally more visual in nature. And the natural interaction there, the scroll, allows for easy ad insertion without annoying the user too much – if they don't like an ad, they just keep scrolling. But Meta, even more so than Google, at least in the early days, was able to leverage key knowledge about you thanks to their social graph. So while they didn't have the same search intent Google did, they had better targeting capabilities.
That's interesting as it relates to OpenAI because they should have sort of a hybrid of these two worlds and models (and, to be clear, Google undoubtedly knows more about you these days than Meta thanks to Gmail and Photos and Maps and everything else). ChatGPT can glean intent from what you type, but also better target ads based on all the knowledge it has about you from previous conversations. Google had this too with previous searches, but you're typing so much more, about so many more things, into ChatGPT than you would into a Search box.
Everyone – even Sam Altman – highlights how good Instagram ads are. It's obviously a combination of Meta's data and targeting mixed with the visual nature of that product. In a way, they're the new glossy magazine ads versus Google's ads which were more like old classified ads (on steroids, of course). Is there a way ChatGPT could leverage those types of ads too? Maybe if they continue to fully build out their image generation tools and can make it a true hub people visit. Meta is obviously trying to do this with their AI products. But it's not clear that will be a natural use behavior with AI content, we'll see.
Sora and AI video would be the next holy grail after that, of course. If OpenAI can break into the video advertising game – aka, commercials – well, that's another massive business opportunity. It's one YouTube is still in the process of siphoning away from TV, with TikTok and yes, Instagram pushing hard as well with some success. And then there's Netflix, Amazon, and everyone in streaming making their moves too.
But we're getting way ahead of ourselves here. First, OpenAI needs to find the right chat-based model for ads inside of ChatGPT. Again, it may be more similar to the Google Search model, but it won't be exactly like it, and new metrics will probably be needed to work at scale.
And there's a privacy angle, which OpenAI doesn't shy away from in their post, which makes it even more of a challenge. Many people are clearly already telling ChatGPT things that they don't necessarily want to be advertised against. And yet, an area like health is one of the most lucrative areas of advertising! So that's going to be a fine line to walk... For now, ChatGPT is probably wisely steering clear.
At the end of the day, OpenAI undoubtedly still wants to believe that they can have a more hybrid model than either Google or Meta have, in that they have millions of paying users from the get-go as they start this ads push – those other companies did not, at least not for the core products: search and social feeds. Can they take their existing model and layer in advertising, versus it consuming the entire product, ensuring "enshittification"? In that way, it's almost more like Netflix.
But again, the key will be finding the right mix of where/when to serve ads and what type of ads to serve. Oh, that's all? The company is confident enough to think that the business will bring in "low billions" this year, but can they do that without ruining the product experience? I think it's going to take thinking differently about ads.
1 Just ask Apple. ↩
2 Or, I guess, you could have an AI agent go do this for you, which every AI player is also rushing to enable. But this is more complicated, with major players like Amazon quickly moving to block such bots. Anyway, that's a different topic. Undoubtedly related, but still also in the future... ↩
3 And does this eventually complement a way to pay publishers/content producers for such information that is surfaced by ChatGPT? The one-off data deals also aren't scalable. ↩
2026-01-16 23:38:49
Ted Sarandos is done fucking around. Well, nearly.
With the endless swirl around the fight for Warner Bros, he's been making the rounds trying to make the case for why Netflix should be the winner. Well, they already are technically the winner, so it's really why they should remain the winner – both against Paramount and against any regulatory push-back. And, deal terms aside – this interview doesn't really hit on those – this is probably his best pitch yet. But I still might suggest altering his approach slightly.
Right off the bat, there's a problem:
I think it was a lot of loud voices, but not necessarily a lot of them. I think a lot of it was folks who questioned, rightfully so, our intent with theatrical because we hadn’t said anything about it. A lot of it was the emotions around that more than anything else.
Yes, that is four "a lots" in three short sentences. That's a lot of "a lots". Also, I'm not sure what to make of the brain twister how there can be both "a lot of loud voices" but also "not necessarily a lot of them". Regardless, he's both too defensive and deflecting too much here. He sort of addresses it later on when asked more directly, but Netflix – and he in particular – has talked about the movie theater business, quite a lot. He can argue semantics (as he does in a later question), but there's far too much smoke over the years for there to be no fire here. He should just own it and say something like:
He does mention the idea of seeing Warner's actual theatrical numbers changing his mind later on, and it's a great, compelling answer. People are allowed to change their minds – and it's especially good and reassuring if they do so when presented with new facts. That's the sign of a good leader, so he should tie that into the broader question about his past statements on the matter, not be defensive about such statements.
I do love that he doesn't shy away from talking about Paramount directly:
If you take a beat and think about who’s been building and who’s been collapsing, it’s the best news possible. When we buy the studio, we’ll be releasing more movies together than we were separately. Our forecast is to grow the content spend of the combined companies several years out. So it’s really good news for the town that we’re going to continue to grow the business.
On the Paramount side, between the $3 billion that they’ve already cut and the $6 billion they’re proposing, those are real jobs. That’s cutting back on production. That endless search for profit by cutting people, jobs and making fewer movies — that’s not our intention at all. We need all those movies. We need all those TV shows.
This is probably Netflix's single greatest strength, even more so than the money they're offering, in their pitch – especially to outsiders. Essentially: "We're not going to cut jobs, Skydance is. How do I know that? Look at what they've done with Paramount, mere months ago." His second best argument?
I honestly think there would have been reactions like that from anyone who was going to do the deal. What people would like to see is no deal. But that’s not possible. There are two outcomes of this deal, and we have a signed deal done.
This isn't Netflix vs. Paramount – I mean, it is – but the bigger battle is this deal vs. reality. If no one does this deal, Warner Bros is going to die. Not today, not tomorrow, but eventually, slowly. It has been decades since the major movie studios could stand on their own as businesses, which is why all but Disney is owned by larger entities (and even Disney is saved by their other businesses, like theme parks and cruise ships, and for a time, cable). A stand-alone Warner Bros would not last long, and WBD is going to split off the cable division which is still bringing in money so... There needs to be some deal done here. Hollywood seems to think Netflix is the worst option, but, plot twist: they might actually be the best option. By far.
After two great answers as to why they decided to do this deal – again, essentially admitting they were wrong in some of their assumptions and realizing that actually their business could augment and accelerate Warner's in ways – we get another small setback. When Sperling (rightfully) pushes back, noting that people are still skeptical of Netflix's actual commitment to movie theaters here, Sarandos gets weak again:
I understand that folks are emotional about it because they love it and they don’t want it to go away. And they think that we’ve been doing things to make it go away. We haven’t.
Again, I wouldn't be defensive there, it seems disingenuous. I would say something more along the lines of:
But I'm also slightly taking this bit out of context, because his very next line is meant to be the knockout punch:
When this deal closes, we will own a theatrical distribution engine that is phenomenal and produces billions of dollars of theatrical revenue that we don’t want to put at risk. We will run that business largely like it is today, with 45-day windows. I’m giving you a hard number. If we’re going to be in the theatrical business, and we are, we’re competitive people — we want to win. I want to win opening weekend. I want to win box office.
There's obviously still a slight equivocation with "largely" but that seems fair, there are going to have to be some things Netflix tweaks – and there are obviously some things that Netflix should tweak – but one of them is not the 45-day theatrical commitment for Warner Bros movies,1 as he makes clear: "I'm giving you a hard number."
That is his updated pitch directly to Hollywood and theater owners. It's less an olive branch and more just a full-on offering: Netflix will commit to a 45-day window. Not 17 days, as has been reported by Deadline and others. 45 days. Exactly what the theater owners are asking for, obviously not coincidentally.
Sperling pushes back again, noting Sarandos' "outmoded idea" quote from not even a year ago. This seems to annoy him, as he thinks everyone has read his quote the wrong way. Again, it's far too defensive. He just should have answered with some variation of the above quotes I've already laid out, or simply said he should have given a better answer at the time – a tactic he's used in the past – rather than arguing semantics.
When pushed again on the notion that Netflix has led fewer people to leave their houses to go to theaters, Sarandos gives a good answer:
You have to give them something to watch. And I think we’ve got to take ownership of the idea that when people are excited to go out and see something, they go. You’ve seen it in some really nice upside at the box office this year. You’ve seen it in our “Stranger Things” finale experience. You saw it in our “KPop Demon Hunters” experience with people. You give people a reason to leave the house, they will gladly leave the house.
This is good because yes, Netflix saw unquestionable success with those efforts. And it shows that they've been evolving in their thinking, even ahead of this Warner Bros deal – yes, something which someone – cough, cough – predicted... Beyond the Warner Bros movies continuing in theaters, Netflix could actually help the industry by continuing to push these outside-the-box experiences.
I would say one of the other myths about all this is that we thought of going to the theaters as competition for Netflix. It absolutely is not. When you go out to see a movie in the theater, if it was a good movie, when you come home, the first thing you want to do is watch another movie. If anything, I think it helps, you know, encourage the love of films.
I did not get in this business to hurt the theatrical business. I got into this business to help consumers, to help movie fans.
Yes, this is a good response. Less good:
Do you think theater owners believe that?
I’ve got a great relationship with theater owners.
Way, way, way, way too flippant. Come on, Ted. Keep your head in the game. This response gives Sperling the rope to put around his neck with the fact that the theater owners group just went to Congress to ask them to stop this deal. "Great relationship" alright! But Sarandos comes back strong:
Like I said, there’s only two outcomes of this deal. We’re going to be the buyer who keeps Warner Bros. running, releasing movies in theaters the way they always have. That keeps HBO completely intact. It keeps Warner Bros. television, producing television, and it creates jobs.
At the end of the day, that may be the argument that actually wins over Hollywood and allows this deal to happen. It's still very much up in the air, and they're going to have to start moving the messaging heavily around the actual competition being YouTube – which it is – but they're nearly there on the talking points now. They just need Ted to fully lock in and stop being defensive. Funny is fine though:
Will you relocate Netflix from its base in Hollywood to the Warner Bros. lot in Burbank? Will you be sitting at the famous desk used by Jack Warner, a founder of Warner Bros.?
I’ll probably have a space in both. Probably neither of them will be Jack Warner’s desk. But it is a beautiful desk.
Tell the truth, you’re doing all this for the desk?
It’s mostly for the desk.
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 I might just point out there's wiggle room here in that he's committing to this window for Warner Bros movies and not necessarily all Netflix movies. But I think that's fair. If it works out well for Warner Bros movies, Netflix may want to use the same window for some of their own. And if not, well... not everything has to be a Warner Bros movie! ↩
2026-01-16 18:40:56
I was back on the Big Technology Podcast this week to discuss some recent posts with Alex Kantrowitz. First and foremost, AI's perception problem, and if a pitchman like Steve Jobs is needed to sell this technology to the public. While Sam Altman has largely been serving in that role to date, it's clearly causing a lot of backlash, fairly or not. Could someone like Demis Hassabis or Panos Panay have better luck resonating with the masses? It feels like Jensen Huang is the closest, but NVIDIA is obviously playing in a different part of the stack and not selling directly to consumers (beyond their graphics cards, of course), at least not yet. And it's just harder to pitch what is essentially software on the user-facing side...
Will this year's slate of Super Bowl commercials help? Probably not, but it will be interesting to see what angles OpenAI and undoubtedly Google and probably Anthropic take in their ads. Microsoft too? Amazon? Meta? It feels like pushing more towards science and discovery should help with messaging, but again, it's not as day-to-day consumer focused. Health certainly is, but there are myriad issues when it comes to marketing such features...
Meanwhile, The Chaos Ladder – where the various players in AI stand ranging from relatively stable to chaotic – saw a lot of movement in 2025. Meta and Apple reset their teams. Amazon reset their tech. Microsoft reset their deal with OpenAI. Google, after being downtrodden from a stock-perspective for the first half of last year, came roaring back to vault into the number two market cap position, joining the $4T club. Anthropic is sneakily stable – a fact which is now being highlighted due to the current chaos swirling around another OpenAI "Constellation": Thinking Machines Lab.
With Big Tech at least, it feels like things are starting to stabilize a bit more as we start 2026. But does OpenAI and Anthropic going for IPOs change that? What about Elon doing Elon things? Does any larger player that's not a part of Big Tech leverage AI in a way to step into those big leagues?
Finally we hit on a few broader predictions for 2026. I'm feeling like the iPhone Fold will be a hit – which I know sounds sort of obvious; an Apple product, a hit? – but Apple has a tendency to start slow out of the gates with such products, certainly recently. But I think the Fold, despite what will undoubtedly be a big price, could excite a lot of people around Apple hardware again. And what if it's touted as one of the first real AiPhones?
There is also the question of who will be presenting such a device to the world. Will it be Tim Cook, or will he be retired (though undoubtedly in a new role as Chairman of Apple's board) by the end of 2026? Feels like there's way too much smoke for it not to happen at some point this year. Though one wild card could be if Apple does make a bigger acquisition, perhaps to bring on more AI talent. Safe Superintelligence is probably a bridge too far, but what about Thinking Machines in their aforementioned state of chaos?
I no longer think it will be Perplexity – feels like they moved on from that idea. But it also feels like someone will buy Perplexity. Samsung spending some of their surging cash thanks to memory chips? Microsoft, still trying to make Google dance? Someone else?
2026-01-15 17:40:59
I mean...
Thinking Machines cofounders Barret Zoph and Luke Metz are leaving the fledgling AI lab and rejoining OpenAI, the ChatGPT-maker announced on Wednesday. OpenAI’s CEO of applications, Fidji Simo, shared the news in a memo to staff this afternoon.
And it's not just those two, a third key employee – I would say "early" but this company is not even a year old, so they're all early – Sam Schoenholz, is also bolting back to OpenAI. And this is after they had already lost another co-founder, Andrew Tulloch, in October. At least he went to Meta, finally giving in to one of Mark Zuckerberg's "Godfather" offers. That somehow looks better than this situation...
Two narratives are already forming about what prompted the departures. The news was first reported on X by technology reporter Kylie Robison, who wrote that Zoph was fired for “unethical conduct.”
A source close to Thinking Machines alleged that Zoph had shared confidential company information with competitors. WIRED was unable to verify this information with Zoph, who did not immediately respond to WIRED’s request for comment.
According to the memo from Simo, Zoph told Thinking Machines CEO Mira Murati on Monday he was considering leaving. He was then fired on Wednesday. Simo went on to write that OpenAI doesn’t share the same concerns about Zoph as Murati.
My god, the drama! We would seem to have a literal he said/she said situation here. Though it seems neither hard nor a stretch to connect the dots that Zoph told Murati he might jump ship back to OpenAI (from where they both came, of course) and so Thinking Machines implemented the old "you can't quit, you're fired!" maneuver. And as a kick in the ass out the door, perhaps there was a "for cause" wrapper, the allegation of "unethical conduct" in sharing "confidential company information with competitors", which reads a lot like an accusation that Zoph, who was clearly in contact with OpenAI, may have told them things about Thinking Machines Lab – perhaps even just the notion that he would be willing to leave could be framed as "confidential company information" if you stretch, I suppose! [Update: more on this below.]
All speculation, of course. But it's an easy picture to paint, especially given what Fidji Simo is explicitly putting out there in not having the "concerns" that Thinking Machines Lab does in their move to fire Zoph. And while it's still being sorted out, they're clearly going to give Zoph some lofty new title, as he'll be reporting directly to Simo, the CEO behind the CEO of OpenAI.
Mix all of this with the reports around Thinking Machines seemingly outlandish fundraising efforts – which is certainly saying something in our current environment – at first reportedly refusing to share much of anything with would-be investors, and perhaps demanding (and getting) a problematic level of rights and control for Murati, and now supposedly trying to raise at a $50B (or $60B!) valuation on the back of I guess a single, smaller product in market,1 but mainly promises and vibes. Oh, and talent. A lot of great OpenAI talent, no doubt.
Of course, they've just lost half of that talent at the co-founder level, so... are investors going to get half off their investments?
Speaking of, in a way, I suppose you could say that Thinking Machine Labs is just following in the footsteps of OpenAI when it comes to co-founder departures. And actually, all of the AI research labs seem to suffer from this co-founder departure affliction right now. Well, except Anthropic. Read into that what you will...
So where does this leave Thinking Machines Lab? Unclear. One guess would be that either we'll hear about that new fundraise soon in an effort to combat this extremely problematic narrative (for recruiting, if nothing else), or perhaps that the team gets "hackquired". Zuck apparently tried, and failed, once here. Apple, which has a relationship with Murati – her departure from OpenAI may have contributed to the Apple/OpenAI funding discussions going off the rails – and may have also kicked the tires back in the day and could use some AI talent, I hear...
Update January 17, 2026: The drama continues with multiple reports now claiming Zoph's alleged misconduct may be tied to an inner-office relationship – which he may have lied about when confronted. Per this telling, this may have led Zoph to look for other opportunties, including talking to Meta, before landing back at OpenAI...
At the same time, others continue to leave Thinking Machines Lab, which may or may not be related to the Zoph situation (presumably the company losing a key technical co-founder, not the relationship part). Most damning are probably the sources stating that "the startup lacks a clear product or business strategy", and as such, has been struggling to raise that massive new round of funding. None of this will help...
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 To be fair, that's more than, say, Safe Superintelligence can say at $32B. A startup which has also lost a co-founder (and CEO no less!) to Meta. Then again, maybe Sutskever is all you need... ↩
