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Some see heroes, others only egos. We see the era of billionaire athletes, a fad to some, the future of money to others. We see crypto's trillion-dollar swings, the end of jobs, or the end of human struggle. We see the endless funds fueling the AI hype. While others follow the noise, we follow the money.
Please take your seats. The program is about to begin.
Don't give me what you get when you act. Just one of these days you're going to get paid. Better watch your back. It's going to get...
The company settled lawsuits brought by the 12 states and the Writers Guild. And that clears the way for that landmark Warner Brothers deal to be closed.
Hollywood built its business on stories. We don't make films to win Oscars. We make films to entertain the audience. Now the business itself is being rewritten. Attention is fragmenting. Capital is consolidating. The lines between entertainment, tech, and commerce disappearing. All as media giants race to stay on top.
Creativity itself is being repriced. Stories are crossing screens, platforms, and borders. And pop culture has become the ultimate asset class. We cover film, streaming, sports, podcasts, music, games, creators, and artificial intelligence. Now, let's talk about what comes next. Two days, one place. Bloomberg Screen Time 2026, where entertainment meets capital.
Please welcome to the stage Bloomberg's Lucas Shaw.
Good evening everyone. Welcome to the opening night of Bloomberg Screen Time 2026. This is year four. So, thank you to those of you who've been with us the whole time. As it says here, my name is Lucas Shaw. I lead a team of journalists at Bloomberg that covers the business of pop culture. I'm also the author of the newsletter Screen Time, which is part of how this conference got its name. We conceived the event four years ago to try to understand and keep up with the rapid changes in media, entertainment, and technology. And I think if you spoke with any economist right now, they would tell you that the pace of change in society at large, in business in particular, is pretty unprecedented. And if you consider just in our little corner of the world, what has changed since we had this event a year ago, right? So, you had prediction markets really take off. AI slop became something we all talked about. You had the movie business, which I think had been left for dead at basically every event we've done for this, feeling very strong right now. We have a new CEO at the Walt Disney Company in Josh Dearo. His predecessor, Bob Iger, just bought the Lakers, which is my basketball team. And David Ellison bought his second movie studio in as many years, maybe in one year. I am not prone to hyperbole, but it does feel like we are on the brink of a pretty major change in media in the sense that, you know, streaming, which has been the kind of the engine of growth for the last 10 years, is slowing down a little bit. You have AI music, which I think was kind of a novelty when we started this a few years ago, now being very mainstream. We have a lot of music being made with AI. And social media creators, podcasters, people who'd been treated as second-class citizens in entertainment are now being treated as and paid as much as pop idols and movie stars. I cannot promise to know what is going to happen over the next 12 months, but I trust that the people that we have speaking here will be able to elucidate and help us a little bit. We're going to kick things off on this stage with the gentleman waiting over there, the co-CEO of Netflix, Ted Sarandos. He's our first returning guest, so be nice to him. Then we're going to go to producer Kathy Kennedy. We'll hear from comedian podcaster Conan O'Brien, and then close things here with Ben Affleck, actor, director, and AI entrepreneur. But before we get things going, I want to run through a few logistics, things you should know. I need to thank our supporting sponsors, Autodesk, Harborview Equity Partners, Turkish Airlines, and Wild Gotch and Manis, as well as our participating sponsor, Cord Music Partners. Now, for a second, as probably the only time I'll ask you to do this, take out your phones. Put them on silent, do not disturb, whatever you do. There is a QR code here for an app. That's the Hub app. You can use it. It's kind of your one-stop shop during the event. You can get Wi-Fi information, you can get the agenda, you can meet up with other people. The number one feedback we hear from folks who come is they want to network. And so we introduced these bilateral meetings this year. We have a couple of other new additions to the Screen Time portfolio, if you will. There's a social content hub out there behind the registration desk. It'll give you some fun questions. You don't have to do it. I said that the Oscar winner for best picture was going to be The Odyssey, which is not a particularly original opinion. There's also this Momento AI partnership we have related to photos taken of people here. So, if you want to track them or track them down, use that. If you want to talk about the event on social media, use the hashtag Bloomberg Time. Tag us at Bloomberg Live. Tag me at Lucas Shaw. I think my handle's a little different on Instagram, but don't worry about it. And one final thing before we get going. This is really more for tomorrow, but we do have that Turkish Airlines lounge across the way. AC quiet. It'll be good when it's 85 degrees. Fortunately, not next week when it's 99 degrees. You all know Netflix. I think most of you know who Ted Sarandos is, but it has been a pretty busy year the last 12 months for them. So, we have a little sizzle to show you what's happening.
Netflix is declining to raise its offer for Warner Brothers.
Looks like a miss for the second quarter.
These expansions are evolutionary, not revolutionary. Adding new things as they become available to us, as we see signals that our consumers will get value including it in their Netflix subscription.
Please welcome to the stage Ted Sarandos, co-CEO of Netflix, for a conversation with Bloomberg's Lucas Shaw. Thanks. Good to see you.
Hello. Told them to be nice to me. You be nice to me.
I'll be me. Do you notice any difference from year one?
The room feels bigger. I know it isn't, but it does feel bigger.
Good. There's more of you out there.
I want to start talking about the programming on Netflix. You know, you're the biggest video streaming service out. We'll take YouTube out of the equation for now. Biggest paid video streaming service in the world. And you talk a lot about kind of making these big broad shows that kind of appeal to a lot of viewers. And I think some people feel like as you have targeted more and more people that your shows are suddenly not because they're for everyone, they're kind of for no one. And so I'm wondering what do you think distinguishes Netflix's programming from your peers?
Well, first of all, just to kind of set that record straight, we do nothing we make on Netflix is for everyone. Every... we hope you find your favorite show on Netflix for sure. To do that, people's tastes are crazy diverse. My wife and I don't agree on what to watch. So, it's pretty hard to get the whole world to agree on what to watch. So, you make a lot of things that appeal to different tastes, including more prestige awards kinds of programming for that audience, which was, by the way, when we started, that's all we did.
Sure. So to get a kind of an idea of how the programming initiative has broadened over the years, that day we started with House of Cards in February of 2013. We had one kind of thing, just prestige serialized drama. And then since then we've added competition shows and game shows and cooking shows and travel shows and original movies and stand-up comedy. Everything we've done since then has just been an ongoing expansion. But we've been doing... we're not doing it instead of the kind of things you were talking about. So I don't think... and including by the way doing it in nearly every country in the world. So when we talk about Netflix, only half of the story, revenue or watching, is happening in America. It's happening all over the world and we have these culturally resonant shows in nearly every market that we operate in.
Right. But so does that mean to follow up on it that the answer is essentially something for everyone? Not that all programming is for everyone, but you have something for everyone because I...
There is something for everyone. For sure. Yeah. But it isn't to say that any one thing is for everyone. Yeah.
There's been a lot of focus over...
Talking like Willy Wonka, right? Yeah.
There's been a lot of focus over the last six to eight months, shall we say, on the question of engagement, which is a jargony word for how much time people are spending watching you. There's... people are worried that the growth has not been as strong as it once was. And so what is your answer for why engagement on Netflix is not growing as quickly as people would like it to, and what are you guys doing to fix that?
Well, if I can talk about engagement for a second, just itself, the whole act of it, we kind of set up this debate ourselves, not on purpose. But at one point we stopped talking about subscriber growth, and we stopped talking about subscriber growth because when you look at our business model, it used to be a one-for-one. We were a one-SKU company. We had one product. So if you added a new member, you knew exactly how to take those economics out. Now we have multiple types of memberships, multiple in every different country, various arms. So it became much less easy for Wall Street or the press to track Netflix by subscriber growth, our growth in any given part of the world. So we said, and so instead of giving that number, we said, here, look, we're going to give you engagement. So we publish a report of everything watched on Netflix, and you know, down to the minute, twice a year. And so we started talking a lot about engagement. So don't worry about subscriber growth. Count revenue, profit, just like a real company. And engagement is just another metric. But at the time we said that, I think we were pretty unsophisticated about how we talked about engagement. Meaning in that world, all revenue is equal, all profit is equal, all engagement is equal, and all engagement is not equal. So we are first and foremost, we are growing engagement. So we're growing on 200 billion hours of watching. We grew 2%, you know, in our last announcement.
Right. But 2% is not what people are hoping for out of you, right? They're used to double-digit growth in at least, certainly in revenue, and to some extent even in viewership, they'd expect more.
This is my point about the growth in general. Yes, overall we're not growing as fast as I want us to, and we're working on making that move faster. We are though also doing things that create a lot of headwind to that number. Meaning when we do live programming on Netflix, which is a relatively new thing, we spend about 5% of our content budget on live events. They generate about 1% of our watching now. They all... but they do a very different job than... they generate a lot of signups. They're really effective for signup, retention, advertising, all those things that they do, but it creates engagement headwind in how you invest against it. And remember when I say we grew 2%, that's an easy number to sneeze at, but it's through all the growth of live, it's through incredible headwinds from things like the World Cup and World Sports and all those things that are going on too. So it is a... we are growing the business. We want to keep growing it faster. This past quarter, we did double-digit revenue growth in every region of the world. So the business is great and growing fine. I do... I mean, if you asked me when we... if we were growing at 20%, I'd be telling you I wish we were growing faster.
Right. So, but when you said you wish you were going faster and we're working on it, what are the things that you are working on to kind of reaccelerate that growth?
Well, it's... these are some of the things are in the expansion of what we do. So, live was an expansion of what we did that didn't necessarily bring more gross engagement, but it brings very valuable engagement. So, it's not a mystery that all engagement is not equal because if... it's... you probably are not surprised to know that an hour of Judge Duty in the middle of the day does not generate as much revenue as an hour of NFL football. And so those...
Or I saw some CPM chart recently that showed what you make per view versus what YouTube makes per view, and yours is higher.
Yeah, we generate more. We monetize better. Our programming monetizes better. Now we do... we're looking constantly of how do we do things to bring more value to the members, more things to watch, more ways to watch, all those things. So that is some of these things that are... and I don't want to overcharacterize things like podcast and those things because they're very small investment and very small addition to what we're doing. The vast majority of what we spend on is professionally made movies and television series and games. And so as we lean into those things and make those big swings, we have a $20 billion content budget and about 5% of that goes to live and a fraction of that goes to all those other things I was just talking about. But there's other ways to, you know, put things on the format for people that they love. Our TF1 deal in France was an example where you can watch now... our customers in France would like more French content faster than we can make it. So we have an arrangement with TF1 where the TF1 programming is available on Netflix and it's very successful and it's growing very fast.
Were you... I mean, speaking of TF1, YouTube just did that deal with Peacock, which was similar in that you're bringing in another type of programming for YouTube Premium. Was that something that you like... why didn't that end up at Netflix? That felt like...
But by the way, we're in our infancy in doing all that part and doing all those add-ons. So in that particular model, I'm not sure how the economics of it play out. It should be designed so that it's... they're selling Peacock through YouTube, which is not different than other channels deals. They're... I think they're trying to incorporate some of the content into their own premium tier, but I haven't seen any of the details of it yet.
But do you think because had you ended up doing the Warner Brothers deal, you would have added HBO as, you know, you would have purchased it as an add-on to Netflix essentially, right? It would have been bundled. Yeah. Do you feel like going forward because Netflix has always been a service you go there, there is one place you watch everything that...
As you try to keep growing, you have to become more of a platform where you are selling other services. It's not that we have to, but we should be... I think we should be much more nimble to be able to add new ways to watch on Netflix for sure over time.
What are the types of services that you think would make...
Well, I think the entertainment business itself is plenty big, and we're only, you know, about 6% of it, 7%.
But so that means like you would... if they haven't done this with anyone, but like if you could sell Disney Plus as an add-on, you would do that.
I think over time those things will evolve. I think for us, what we did with TF1 was one of the more difficult executions of it, which enables us to then pan that out to much simpler, more straightforward add-ons, right? If we choose to go that path, and I think you looked at it, is we've not looked to any of those ways to grow revenue yet, right?
So that's upside in the business over time. I know you said YouTube and podcasting is a small part of what you do, but I have to ask because you like talking about different types of viewership. And you made at this point somewhat infamous remarks. I think it was last year where you talked about sort of Netflix is where you spend time and YouTube is where you waste time. I probably...
Time... I didn't say waste. Sorry, Neil.
You have done a bunch of deals with prominent YouTubers. We had... we were at dinner last night. Mark Rober was there. You've done a deal with him. He's a big star on YouTube. So has your opinion of YouTube changed as you do more of these deals?
I shouldn't have said that. The truth of it is no. I mean, we're definitely... we're not in the UGC business. We are... we are in the prof... I told you, and we're in the professionally produced content business. Now, I think there's a bunch of people on platforms that are doing pretty close to professional programming already. And if we can better monetize that programming for them, we can make a deal with them, but we're definitely not trying to bring over the whole population of creators. There's some people... I would remind you my kids are 30 and 32 years old. When they were seven and nine, if I'm doing the math right, they were watching Blue's Clues on Nickelodeon. It looks just like some of those, just like Danny Go. I mean, that programming... that's how that stuff has evolved. So when I look... when we're looking for new talent, we're looking everywhere. Film festivals, film schools, submissions, everywhere we go. So of course you're going to look to the platforms and find new talent. And what we do, and you could ask Mark about it when you see him, Mark Rober, we basically take what they're doing and give them the resources financially and infrastructure and otherwise, and production support to do things on a larger scale than they can do currently and that they can monetize well on other platforms.
And so is that the... because if I'm a YouTuber and YouTube has sort of made it known recently that they don't love you, your deals have changed a little bit. The Mark Rober deal was make a bigger show than you were making. But you've started to do these deals where it's day and day post to YouTube... your videos to YouTube and Netflix at the same time, and YouTube does not like that. So if I'm a YouTuber and YouTube says please don't do that, why am I still going ahead and doing a deal with Netflix? What is... No, I mean it must be good for you or you wouldn't do it.
And in a perfect world, I think anytime you've got a business where you've built up your content brand and you're trying to monetize the best you can, you're trying to figure out how to build one without cannibalizing the other. The same way the studios do it today with windowing, or the networks do it today with lease... with should they license their content or not. Sure. So how do you build a business without cannibalizing the other one? And sometimes you can't, and you just have to pick a partner.
You mentioned gaming earlier, which is though you've done it for a few years, still feels new for you guys. Five years from now, do you guys... do you think you're still hosting games on the service?
I think so. Really, what's exciting right now, and the mobile gaming was a gateway to cloud gaming. So really, we were much more interested in what you could do on the TV using your phone as a remote. And remember, in a kind of post-console world, there's going to be all kinds of opportunities for gaming on the television. And that we want to be, you know, early invested in that. I like it for IP extension. I certainly like it for brand value for people who want to spend time on that screen gaming instead of watching, that we have an option for them.
And would you... because you've closed some studios, some of which you bought, I believe, would you as you look to scale it, would you ever buy one of the big studios? Take-Two, Microsoft seems to be unhappy with that.
Well, as you know, we're not... we have not been traditionally big buyers. The Warner Brothers notwithstanding, that we've not really been... we've been builders from scratch. So I do think we've looked at some, we have built some, worked with some of the smaller studios and programmers and developers, and there's a likeliness of those things come. The big problem with when you do these deals, and the reason why I go back to why the Warner Brothers was attractive, even though I said we were not going to do that, is it's very rare that this kind of asset was so clean. It was just... you're just buying just the things we wanted to buy. And so we were able to very easily look at this and say, how will this add value to Netflix and not destroy value in other ways? How do you take this growth engine and have it supercharge our growth engine? And for us, the ability to do that made that deal super unique. We're not looking for the next opportunity to backfill that deal because our plans and how we're going to grow is primarily organic, and we'll look for opportunities that complement the business as we go. It's the same for games too.
I'm curious, knowing what you know now and how the street has sort of turned on you a little bit because of that deal. Do you regret going after Warner Brothers at all?
No, I think it was... the plan was solid. I think we... and we certainly... we won the deal at some point, so we priced it right. At our scale, that was the top price point where I thought we could return value to our shareholders with that asset. Any more than that, I didn't... I thought we'd be taking into negative territory even with our scale. So when I look at that and I think, well, you... and I think that what you're just referring to, I think what it did is the deal itself kind of threw the business narrative off for investors, for the press, for other folk. And you have to be willing to put the business narrative at risk for something that's good for the long term of the business, not the whole business. You don't put the business at risk, but you have to put the business narrative at risk if you're convinced that it's good for the long-term return. And we have always run this business for the long term.
And how do you reset the narrative when investors come to you and say, you know, we're a little worried. How are you going to grow? You just say more of the same because that feels like an answer that's not going to...
It's been the answer though, for many, many years. And I'd say if you look at it and say, you know, the business is double-digit growth in every region of the world, is growth, and we are doing that. And there's a funny thing, like all the bells and whistles and all the exotic things you want to do and try in India right now, our business is growing very, very healthy. And the reason why it's working is they have two shows that are very, very hot in India right now: Operation Safar and Muser Cafe. And they have a daily show called Lockup. It started off as a five-day-a-week show and it went to seven days a week. It was one day a week, went to five days a week, went to seven. And it drives so much conversation and buzz in India that they come in and then they lean into this other show which is kind of a Top Gun-like series and this other one which is like a slow-burn romance. And it's just the programming is on fire in India right now, and that's driving the business. No, they don't even have an ad tier in India. So it is... at the end of the day, we will win and lose by executing on that core. Yeah. Having the programming, the movies and TV that you can't live without.
Okay. Movies. You have a movie opening in a couple weeks. La Bole Negra is getting, I think, the longest window Netflix has ever given a movie. It...
Yes, window from the first before it ever shows up again. Remember, when people always talk about these windows, we don't take the movies out of the theater when they come on Netflix, and some of them do great business after they're on Netflix. I think Frankenstein played in theaters for like four months.
But you are giving La Bole Negra... you're giving credit beforehand. Yes. You're giving it more than a month where it's in theaters before it goes to service. Why are you doing this now?
There's a couple things I'd say. When we were looking at the business early on, we... this is a true thing that people have a hard time with. Movies in the box office are not necessarily bigger on Netflix. Not... no disparaging movies in the box office, but movies that come out in the theater do pretty well. What happens is the most passionate audience went to see it in the theater. So by the time it comes to Netflix, you've lost that passionate audience and you got the people that go, 'Oh, I meant to see that' or 'I'll get around to that.' Or 'I heard that was crappy and I'm curious now.' Yeah, now we'll take a look at it. But by the way, this isn't that new. I go to the theater all the time. I listen to what people are talking about, and they do talk in the theater a lot more than they used to. But the people sitting in front of me while they're running the trailers, I'll go, 'Oh, I'm going to see that. I'm going to see that. Oh, we'll watch that on Netflix. Oh, we're going to watch that on Netflix. Oh, we're going to see that. I'm going to see that.' So it's not like the window is really driving that decision. They made that choice for the first time they saw the trailer, right? But I do... but what surprises people, but if you look at that data that we publish twice a year or once a year now of the top movies, all of our top movies are the Netflix originals. They beat all the pay TV window titles that come to Netflix, except for the kids and family movies because they get a lot of rewatching. So what we're doing is looking at this model and saying, 'Okay, how do we serve movie lovers who may want to see this movie in a theater, and how do we not harm value to Netflix, and how do we position the film best in the world?' Last year we put over 30 movies in the theaters. All with bespoke plans of how many days are going to be out, how much marketing to spend, what cities to play them in. Very bespoke, but 30 movies in theaters. And when you look at all this, what you figure out is that on one end of the spectrum is La Bole Negra, Train Dreams last year. That could have played in the theaters for six months and it wouldn't have impacted... it would have done, you know, net positive to Netflix. Those kind of art house films or, you know, play like that. And then the other end is the kind of four-quadrant family rewatch movie. And that... you know, so we said let's take those two and treat them different. So we're going to do a big wide release for Narnia next year. And we'll do a big wide release for Charlie versus the Chocolate Factory at the end of the year. We think they'll do great. And when the K-pop Demon Hunter sequel comes, you could expect a very broad theatrical release. And what does...
And then on the other end too, we have... you said La Bole Negra, but we also have a seven-IMAX release for Booth.
And we have a shorter, but not by design shorter, window release for Mosquito Bowl, which is Pete Berg's new World War II movie.
The one with Pat McAfee in it.
Yeah, Pat McAfee is in it. But it's a phenomenal movie and I'm so thrilled that we're going to get to see it on big screens too.
What does success... because it's not your main business, and what does success for a theatrical release look like for Netflix?
Well, it won't be tied to the eventual... I mean, the P&L itself would not... we have relatively low expectations that will add much to the financial outcome of the film itself. So if the... but the success would be that it played... even with a big like Narnia movie. I would say look, if there's... when you do all these things, if you're going to say pick a little risk to the Netflix performance, it should have the potential for a very big upside in the theater. So if that... and that I think for Narnia, for K-pop Demon Hunters, that's why they're going to get big, broad global release. But I think in the other ones where it's kind of in the middle, that's where it gets tougher.
Right. We talked about selling other services. I'm curious. You guys have also talked about giving a... or creating a free version of Netflix. I know you're not necessarily doing it, but what would that look like?
Well, we're not doing it. And I...
No, no. I said not now, at the... not at the second. We're looking at it. Right when you look at all these different models, and I think the one that would look... when you look at that, you see AVOD has been an interesting new engine in the last couple of years that is taking attention on time and attention on television. Now none of those services have gotten very big and none of them have gotten profitable. I'm talking about the, you know...
I don't want to name names. You can...
I think they might quibble with the... they're not profitable. Maybe, maybe. But when I look at it, what I... the hard part is that you're making these trade-offs of saying how this can't be... so this can't... it won't be big enough that it will pay for cannibalizing the core product. So you have to figure out... that's a very fine line to walk of how much product you put in that product and how much you put in the free product and how much you put in the hybrid one. I don't think that the AVOD service can support very ambitious programming, right? And we're... our primary reason for being, the reason we jump out of bed in the morning, is for ambitious programming.
We're low on time, but so I'm going to speedrun through a few questions with you. You mentioned... this is where we get in trouble. No. You mentioned kind of big ambitious programming, and I'm just curious because in the... I feel like in the last little bit there have been a lot of folks that you were in business with for a long time who are taking deals somewhere else or not sticking around with you. We had the Noah Baumbach announcement, the Shawn Levy announcement. And I wrote something about Fincher this week, and I'm just curious, does this say something to you about where you stand with the talent community, or each of these are just individual cases where it, you know...
No, they're individual cases, and the talent... these deals all serve completely different purposes. Sometimes it's a simple way to organize a lot of work that you're going to do together for 10 years, and the overall deal is an interesting... a good way to package it and present it. There's other ones which is you're a filmmaker, a television creator has a very specific thing that they want to do, and that we're going to do it together, and it's going to take many years to develop, and the overall deal is a way to do business together for two or three years it's going to take for this product to come to market, and different things come at different times. I'll talk about a couple of the ones you just mentioned. The Duffers have worked, you know, with us for the first decade of...
Creators of Stranger Things.
Stranger Things, sorry. And they had a dream that they did not want to make more TV shows right now. They really want to make big temple theatrical movies. And I said to them, I told Matt and then I said, 'Guys, Matt and Ross, you guys are great at what you do. And I think you should go do that. You're 40. Don't wake up when you're 60 wishing you did that 20 years later.' And I'm thrilled for them, and they're going to have great success, and they have great success, and we, the Stranger Things universe, are going to continue to be a part of forever, and that's fantastic. Shawn also was with them, and he just kind of doing the same thing. And the problem when you have an overall deal with someone who has commitments in other places, you're in constant conflict for their time. And Shawn is going to be making Star Wars movies for a while, and he's like... so that the fact that his deal is with Disney makes a lot of sense, and I'm thrilled for Shawn. We're going to do a ton of things together. You know, we're still... we have shows in development together. We have a show called Sticks coming up that we're doing. We have a lot of that stuff's going to stick around. But it was a big challenge, I think, even in the Ryan Murphy deal when we brought it on, was he had all these commitments to everybody else though.
I mean, the desire to do movies would seem like something you could solve now that you are putting certain movies in theaters. But...
Yeah, if that's going to be your primary thing that you want to do, that's probably not the right thing. And then with David, by the way, we've been in business with David Fincher since 2013.
2011 really, when you first did the deal.
When we did the deal. Yeah. And then we did... and he has not done a movie outside of Netflix since 2014. And he's... and he doesn't know what he's going to do next. And he's... he's a great guy. We made... I love the three films we've done. Wait, did you see The Further Misadventures of Cliff Booth? It's phenomenal. I'm super proud of Mind Hunter. 17 Emmy wins for Love, Death, and Robots, House of Cards, of course. And he's just... he's one of the greatest living directors. And the meetings when we... we plan on being in business together for a very long time. And this deal is not like he's leaving me to go somewhere else and do something else somewhere else. We'll see what he does next, and we'll be in the mix with it.
We talked about Warner Brothers. How big of a threat, competitive threat, do you see the whatever they call this new company?
Well, it's... it looks on paper so far it's one and one. So I don't know if one and one is two, or one and one is one and a half, or one and one is three.
And when you say one and one, just their share of streaming or... Yeah. Yeah. They do have someone running it in Casey, who we know you like a lot though.
Yeah. For some reason we had a very well-publicized lunch.
Well, I think that... I mean...
We have eaten together many times, but yeah.
From what I heard, there was some suggestion that there might be a job for him, not necessarily at Netflix, but working with Netflix.
Yeah, that's... he's going to be in a very good position wherever he does. He's a super talented guy. Another thing that got a lot of attention during that process was sort of relationships between the Ellison family and the president, you and the president. I guess two-part question. What is the... like, what is your relationship with President Trump like? And what do you think are the odds that we actually get this federal film tax credit passed?
Well, this is... for everything else you might not think, he is a guy who really cares about the entertainment business, and he cares about protecting the industry and creating jobs, and he loves creating jobs in the entertainment business in America. So we talk a lot about how that could work and what's the upside and the downside of that. We're one of the largest producers of, you know, film and television in the world. And we do business in... we've shot last... over the last couple of years, we've shot actually in every... in all 50 states. So we understand the kind of where it works and where it doesn't, and where these incentives actually do create jobs and where they don't, and how they work best. And I feel like what we're doing right now in New Jersey, we developed an incentive in New Jersey that is the most competitive in the country, that actually competes with most of the country, most of the places in the world. A good chunk of the production in America has gone to the UK because there's a very big, very attractive incentive, and public companies have a fiduciary responsibility to deliver the most they can for the money. So they've chased those incentives all over the place. In the US, the states compete with each other for that, but they do not compete well with other countries for it in total. So the federal incentive, which would be a layer of incentive that would go on top of the states' incentives, would compete with other countries and bring those... keep those jobs back in America. So what we do when we film in New Jersey, it's an economic for... it's not...
That's why you like it, but do you think it's going to happen?
There's a couple of wild card things. I think it's a bipartisan...
Approach which helps a lot. I think it's completely sound and it has a working model that's proven that you can put a dollar in and get six to nine dollars out depending on how well you administer the incentive. The problem is you have, depending on what's going to happen in a couple of weeks, a lame duck session, and if you have a change in control and who wants to champion what and who wants to give who a win, the win for America is if we got it, that would be a win for the country. I can't predict what's going to happen in politics. I'm not very good at that on a good day. But I do think it is absolutely economically sound policy to have a competitive production incentive just like you would any other industry.
That was the number one question I got from some of the people backstage who work in the industry and are desperate for the jobs to come back.
Yeah. And I think, by the way, I say this to California as well. But I just think over the years California got, I think, complacent that the talent was here. They let the infrastructure age. They make it very difficult to shoot in the city of Los Angeles. I tell you, we just finished David Fincher's movie, which was no walk in the park. But Animals, that opens next week, Ben, you're going to have been here. We shot that in LA. We shot Clip Booth in LA and we shot the new season of Everybody Wants Us, all coming up in the next couple months. And those three productions alone, over $400 million of production spending in Los Angeles, without the best incentive. So yeah.
On that note, thank you very much.
Ten years ago, you made this bet that local stories would be global hits.
What's the next bet that's that big?
There's two things that are happening in the entertainment world. One is obviously AI and how that's going to impact production and storytelling. And the other is the audience requiring a certain level of agency that they didn't used to. And I think it's the interactivity of it. It's the online betting and prediction markets and all those things are actually pulling in the audience and giving them more engagement. So I think that fundamentally the entertainment business has to do one of two things: either help people connect or help people escape. And I think sometimes you don't know what mood state you're in and what you want to do. So I think the next wave of entertainment technology should be able to address both of those things.
Please welcome to the stage Kathleen Kennedy, producer at the Kennedy Marshall Company, for a conversation with Bloomberg Business Week's Brad Stone.
Hi Kathy, welcome to Screen Time.
We are thrilled to have you here. So, it was about 15 years ago that George Lucas brought you into Lucasfilm as president, and then sold the company to Disney, and then some folks might remember he kind of went through some stuff. He described it as like selling his kids. He was conflicted. And now earlier this year you stepped aside as president of Lucasfilm. You passed it to Dave Filoni and Lynwen Brennan. So, I'm wondering, how are you feeling? Are you feeling a little bittersweet about it?
No, I'm not feeling bittersweet. I suppose there's a bit of relief. These jobs are not easy, and stepping into something like that that George had created was an incredible challenge. And I'll tell you a story that I thought was actually kind of amusing is when I first said to him, 'So, George, the stories that we're going to do next, I mean, is there anything I should look at? Should I have some sense?' He said, 'No, no, it's all here.' And I said, 'Okay, well, that's going to be interesting to try to mine that.' He did have, as I recall, he had story treatments, right? The next... We had a couple of paragraphs. He didn't really have story treatments, but the amazing thing is that he put together an incredible company, and there's amazing people inside the company, Dave being one of them. There were also a number of people that have been with Lucasfilm from the beginning, certainly through all the prequels. And so there was a great deal of knowledge inside the company that we could tap as we created things.
It's interesting that you mention a sense of relief because running a major franchise, and certainly one as beloved as Star Wars, is like it obeys laws of physics all its own. You know, you have the creative forces, the economic forces, but then this great intangible of the fans who care more than anyone and believe that they own it. So what did you, through those 14 years, what did you take in terms of how hard it can be to satisfy everyone?
Well, I think that's the challenge that all franchises, certainly something that's been around now for 50 years. You've got people where this means a lot to them, and there's generations that have grown up with it. There's families that want to pass it on. There's strong opinions about what the story should be. There's a sense of connectivity that you want to try to preserve. But at the same time, the challenge is to try to create something new, something original. So finding that balance is really the toughest thing.
And what did you learn about listening too closely to the fans? Because certainly there were some arguments out there, and maybe I'm watching social media too closely, that the franchise veered a little bit because of a passionate corner of the fan base.
Well, I think learning it came from just getting a sense of what people cared about. You want to pay attention to that. But the creative process for me is finding talent that somebody has to have a strong point of view in the storytelling, and you want to support that. So again, it's finding the balance of what it is the fans want without making that be a referendum, and at the same time support the talent that you brought in to tell us.
So, as you look back, what are you most proud of? And also, if you could go back, or to put it another way, if you had Indiana Jones's Dial of Destiny and you could click it back and do it again, start over 14 years ago, what do you do differently at Lucasfilm? What are you most proud of? And what if you had a do-over, what would you do?
Well, I'm incredibly proud of the fact that we were able to create Force Awakens, for instance, which relaunched the franchise and started new storytelling, introduced a whole new series of stories. I think Andor in the television space is something I feel incredibly proud of. I think Mandalorian, same thing. Many people who enjoyed Mandalorian were able to sit down with their families. We launched that in the middle of COVID, and needless to say, that was a very disrupting time in the industry. So I feel very proud of those shows.
Do-overs? No. I mean, I don't think you can do anything in terms of the movie business where every single thing is going to be a perfect hit. I think you learn things. I always like learning things from the movies that we do, the post-mortems we do on what worked, what didn't. But I'm always proud of the work that's been done.
Well, speaking of post-mortems, The Mandalorian and Grogu I see as doing quite well on streaming right now. But it struggled in cinema. But since we're talking about these intangible rules of major franchises, what did you learn about creating this franchise for streaming and then trying to bring it into cinemas?
Well, that was interesting because when I came into this, we never had any plan to go onto television. So that was really a learning exercise for all of us. And we brought a lot of the sensibilities we had in making movies into the television space. I've learned a lot about what the contract is and the relationship is with somebody in their living room as opposed to what it is you're creating for the theater. So I would say that that's probably the biggest learning curve we had to go through.
But you still have conviction that a franchise like Star Wars should do both. Like, what does streaming bring you that the cinematic experience...
I think absolutely you need to do both. I think what's fantastic about streaming is it's a different form of storytelling. It's long-form storytelling. And interestingly enough, George Lucas started out with serialized storytelling. That's what inspired him with, you know, Buck Rogers and that kind of cliffhanger storytelling. So I think absolutely something like Star Wars belongs on television, but it's a different process than what you go through with making a movie.
That's so interesting. You quite famously started your career in Hollywood supporting directors, supporting their visions: Steven Spielberg, Francis Ford Coppola, Robert Zemeckis. And then in this job, you were an arbiter of talent, but sometimes you were required to replace directors. Talk about that part of the job and the transition to being an executive.
Well, that really only happened once. Thank God. I wasn't required to do that. There are many complicated situations that develop that certainly reach a point where you have to make a difficult decision like that. Certainly my track record shows that I've worked with a lot of different directors. I've made many different kinds of movies and I've never been in a situation like that. But I think there's a... you walk into something like Star Wars and you realize there's such an enormous expectation not only with the audience but also with a studio. And this was new for Disney. This was something that they had just acquired. There was a gigantic expectation. It wasn't like we were bringing somebody something in and building. We were actually starting at the top.
Well, let me ask you about that because George starts Lucasfilm and he's an indie director up in Northern California and now it's part of Disney and of course that affords it enormous scale. But I guess my question is, is the trade-off still worth it? The trade-off to have Lucasfilm inside a large company like Disney?
Oh, yeah. I think there's no question and I think Star Wars was a perfect acquisition for Disney and it was something George wanted. There was no other company he wanted to sell the franchise to other than Disney.
You talked about expectations. Have they become unmanageable? The expectations of the fans?
I think now the franchise is at a point where there's such diversity within the storytelling that's going on and I think the expectation has been moderated, let's put it that way.
Okay, let's talk about the entertainment industry in general. When we spoke before the conference, you observed that we in the media like to be a little gloomy and compare today to previous versions of Hollywood. And so I do wonder, with all of the concerns that feel like they're looming over us, from studio consolidation to AI to the changing economics, why are you going back into producing? Why are you optimistic right now?
Well, I'm optimistic. I think that, you know, I've always been around technology. Every single movie I've made in the last 15 or 20 years has been pushing technology to the next level. So what I'm seeing happen is that there's an opportunity using these new tools that give people access in a way that they haven't had before. And it also allows for, especially in the pre-production phase, to be able to put something on its feet, get an idea of what it is you're trying to create before you have to commit massive amounts of money, time, people. I think those are enormous benefits and we're just starting to get a sense of how that's going to affect what we do.
You recently convened a group within the American Film Institute. It was somewhat quiet at first and included technologists from Silicon Valley, producers, actors and actresses including Ben Affleck who's joining us later to talk about AI. And some of that has become public, but tell the story of that. Why did you do it and where are you now with that process?
Well, what's interesting is we started having these small discussions that started almost five years ago. I had actually run across an artist, a very interesting artist, not a filmmaker, by the name of Refik Anadol. And Refik was doing some really interesting things with his art. He had actually done an installation called Unscripted at MoMA that got a lot of attention and so I tracked him down to find out what he was doing and he had a studio here in Los Angeles. So we walked through a lot of the experimentation that was going on and I said, you know, there's such fear and anxiety around any discussion with these new tools. What if I were to gather a group of filmmakers and storytellers and then we could try to find an equal number of people on the technology side. So we put together technologists and creatives and we started having these salons with about 20, 25 people, all off the record. We weren't trying to necessarily be secret. It's just that there was a lot of anxiety around anybody talking about this very publicly. So we didn't have any particular objective at the time. It was really just an opportunity to share information. And it was so obvious right away that everybody wanted and needed to talk about this and really appreciated the exchange of ideas. So as this developed, it got to a point where somebody at one point said to me, 'Well, what is this all amounting to?' And I said, 'You know, I'm not exactly sure, but maybe we should start to put together some kind of document around the things that people have been talking about.' And we put together a document that we called HGW, which is a bit of a mouthful, but it's human generative workflow versus machine generative. And we broke down the steps of what that meant and why precision and human intention was so important to the creative process and how did that figure into the discussion around how we use these tools and how we frankly protect the craft. So that dovetailed into the realization that for the last two or three years I've been the chairman of the board of trustees for the AFI. So I asked Bob Gazzale if he thought that we could actually begin to focus these discussions around the AFI because AFI is essentially kind of neutral territory. It's a conservancy, a graduate program, and there was the opportunity to put together a summit where we could bring members of the industry in to talk about this. So we carefully curated that group and got people together. We put the paper in front of everybody and it began a discussion that has really started to kind of catch on inside the industry. And I think people are recognizing that we have a bit of a leadership void in the industry right now. Everybody's looking for guidance as to how we're going to go about using these tools. And although right now it's a kind of evolution from special effects, it's moving very rapidly into more than that. And so rather than just accepting the fact that this is going to happen to us inside the industry, I think what many of us are trying to do now is to find a way to be more proactive.
And I get the feeling we could talk about this for more than the time we have, but where have you netted out on that question of negativity? Like when it comes to economic destruction or job dislocation, did this process reassure you at all?
I don't think it's about reassurance. There's a huge amount of anxiety around all of this because there's so much we don't know. I think where it nets out is we're also doing some work inside the AFI where we're actually working alongside some people at Harvard right now to put some real data behind what actually is happening. Are people being displaced? Are they being replaced? Are there new jobs being created? What are those jobs that are being created? And as we start to look at this, it makes sense that things that are just tasks are probably going to become automated. And there's certainly areas within special effects right away that we're looking at that will likely become automated. And so then it's on the industry and it's on us as filmmakers to then work with the next generation that's coming into the business to try to articulate what are those paths that we're creating for younger people to get into this business because if we don't provide some kind of mentorship and apprenticeship, which is what we've all gone through, many of the people in our business have been learning things on the job. How do you continue to do that? How do you create an infrastructure that allows for that? And so I think those conversations are incredibly important and they're kind of siloed right now. So that's one of the things inside the AFI is we're trying to bring people together, share information, find solutions.
So Lucas asked Ted about Paramount and Warner. I think we're going to find that this might be an emerging theme here at this year's Screen Time. So let me take a shot here with you. You, when you were in Disney, saw Disney acquire Fox, so you have seen this movie before. Are you worried about another iconic Hollywood studio disappearing?
I think we're all worried about that. To have a studio disappear and fewer movies get made, fewer content gets made, the ability for the studios to be able to scale the work that many of us do. I think that's the biggest worry. We'll see. David has said that he's going to maintain a lot of what's going on in Warner Brothers. I think Disney did that to some extent with Fox. Not nearly as much content, but if it really is 30 movies a year, we'll see.
Right. And maintaining the output for five years is different than doing it in perpetuity.
So you recently attended the opening of George Lucas's new museum, and I know that's a hot ticket now here in LA, but I've also heard, I've not been myself, but it's a little divisive or a little polarizing. Since you went to the opening, tell us about that. Is there a narrative behind the Lucas Museum of Narrative Art?
There's a narrative in that I think if you know George well, anyone who knows George, that museum is like walking inside his mind. It is quite extraordinary what he has put together. And I think the divisiveness may come only from the fact that it's being compared perhaps to other museums. I think what George has done is absolutely amazing. And I think that the fact that he wants to celebrate illustrative art, he wants to look at the things that inspired him. He's probably one of the first people I certainly met where it was so clear that art and illustration and the things that he's showing all of us now inside this museum are the things that inspired him. So you get a real sense of why he had such a connection to the population, to people, to understanding what people wanted. I think that if you go into the museum, I think you'll see and feel that right away. And even the landscaping on the outside is quite exciting.
And how does he feel about Star Wars now, 15 years later, do you know?
Oh, the whole time I was working there, he would just constantly remind me that he was retired. So I think that's where he is.
