When AT&T (NYSE:T) closed on its purchase of Time Warner, it vaulted upward in the media landscape, but the fact remains that streaming behemoth Netflix (NASDAQ:NFLX) is the company everyone else is chasing today. And that leaves MarketFoolery podcast host Mac Greer and analyst Aaron Bush a bit bemused by the recent comment by AT&T CEO Randall L. Stephenson that Netflix is the Walmart (NYSE:WMT) of video streaming, while his company's HBO is the Tiffany (NYSE:TIF). Questions of luxury vs. mass market aside, it's not exactly a stinging critique to compare your top competitor to a globe-spanning retail empire.
In this segment from MarketFoolery, the duo discuss the rivalry.
A full transcript follows the video.
This video was recorded on Sept. 12, 2018.
Mac Greer: Aaron, for our last story, I want to talk about the battle for the living room. Now that AT&T has completed its acquisition of Time Warner, AT&T owns channels like CNN and HBO. On Wednesday, AT&T CEO Randall Stephenson was talking about the competitive landscape and said that if Netflix is the Walmart of direct-to-consumer, streaming HBO is the Tiffany. What do you think of that analogy? Netflix is the Walmart, HBO is the Tiffany.
Aaron Bush: It just brings back deja vu. In 2010, Time Warner's CEO called Netflix the Albanian army. I feel like maybe they haven't entirely learned their lesson yet. Calling them the Walmart, in some ways, it's an upgrade. He's also forgetting that Walmart is still 20X bigger than Tiffany.
Greer: Yeah, I don't think I get that analogy. Is he trying to cheapen Netflix, saying it's generic or it's cluttered? Where do you think he's going with that?
Bush: Yeah, I think he's saying that with Netflix, you're just going to get a lot of content. It's a reasonable price, and you're just going to have a lot of content to work with. You know, that doesn't sound so bad.
Greer: And it's convenient.
Bush: Yeah, and it's convenient. With Tiffany, what he's really saying is that, "We might have less content, but what we do have is going to be quality."
Greer: Yeah, I'm not sure that works, though.
Bush: Yeah. I mean, the more content you have, the more quality content you can put in it, too. Jim Mueller, before we were taping, mentioned, "You know, Netflix has one more Emmys lately than HBO, right?" So, ouch!
Greer: If it is the Walmart, it's doing OK. With that in mind, how about fill in the blanks? Netflix is the ____ of streaming. HBO is the ____.
Bush: How about, Netflix is the Fortnite of streaming. HBO is anything else a kid could spend their time on.
Greer: That's interesting. I don't know. I worry about that. I almost think Fortnite's a craze. You're not saying Netflix is a craze, are you?
Bush: No, I don't think it's a craze. I think Fortnite is a craze, to some extent, but I don't think it's going to go away.
Greer: Where do you rank Fortnite, in terms of the potential for it to be a craze? Where do you rank that vs. Angry Birds?
Bush: Maybe it's similar. Maybe it's a bad analogy.
Greer: Oh, wow! No, no --
Bush: I mean, Angry Birds is still going somewhat strong today.
Greer: Yeah. But they made that movie, and I'm like ...
Bush: They sell lots of toys.
Greer: Right now, would you make a Fortnite movie if you knew that it wasn't going to come out for two years? And I go to you, and I say, "Aaron Bush, I need you to invest in this Fortnite movie, it's coming out in 2020?"
Bush: Probably not. Probably not.
Bush: I mean, most video game movies bomb. Maybe Fortnite isn't the best analogy for Netflix. Maybe Netflix is the Twitter of streaming, HBO is The New York Times. Something like that.
Greer: OK. I'm going Netflix is the Costco of streaming. I think people feel a real affinity for it, and they really like it, and, like Costco, it's competing with Amazon.
Bush: Not bad!
Greer: I've been thinking about this.
Bush: That's pretty good!
Greer: I don't know what HBO is. And I don't know what Randall Stephenson is of AT&T. I would say, you know what? Kill the whole Walmart thing. I don't think it's working for you.
Bush: Yeah, maybe just don't talk, and go back to work.