With 2015 almost gone, this episode of Industry Focus: Consumer Goods brings in a very special guest: Austin Morgan, video production editor at The Motley Fool.
This week, Sean O'Reilly gets a youngster's take on craft beers, the gargantuan acquisition in the beer industry that's very likely to complete soon, which video game systems are all the rage with whom, whether he'd actually pay $20 to see a movie in IMAX (NYSE:IMAX), and how many people are using his Netflix (NASDAQ:NFLX) account.
A full transcript follows the video.
This podcast was recorded on Dec. 22, 2015.
Sean O'Reilly: We're mixing things up for the holidays on this Consumer Goods edition of Industry Focus. Greetings, Fools, I am Sean O'Reilly, joining you here from Fool headquarters in Alexandria, Virginia. It is Tuesday, Dec. 22, 2015, and joining me to talk consumer goods is Motley Fool video production editor Austin Morgan. What's up, man?
Austin Morgan: Not much. A little different.
O'Reilly: I'm used to seeing you behind the glass over there. What's going on here?
Morgan: A little different, being on the other side.
O'Reilly: So, folks, this week we're doing something a little different. I don't know how things are at your office, but things are starting to wind down here for the holidays. So, I thought to myself, this is a prime opportunity to talk to a young millennial about all things consumer goods. This is the perfect show, Austin.
Morgan: Yeah, we'll see how it goes.
O'Reilly: We're going to see how you spend your money. Obviously, this is just a poll of one, but we've talked a few times before and I did learn a few things about how a young guy in D.C. spends his money. So, before I riddle you which questions, tell us a little bit about yourself, where you're from, what's your favorite color, what school did you go to, what was your favorite Sesame Street character when you were a kid?
Morgan: Well, I was born and raised in Annandale, been here my whole life, right outside D.C. I went to George Mason University, graduated last December.
O'Reilly: So it's pretty local.
Morgan: Yeah. I went to Lynchburg for one year.
O'Reilly: Very good.
Morgan: But I came back.
O'Reilly: You missed your mother?
Morgan: No. Sorry, Mom.
O'Reilly: She's listening.
Morgan: No, it's good to be home, but not all the time. I'm still home because I graduated last year.
O'Reilly: Attaboy. How long have you been with us here?
Morgan: Less than a year. I started end of last January.
O'Reilly: OK. I was trying to remember everything. So, before we came in here, I came up with a couple of questions that I'm actually anxious to get your thoughts on, because I'm going to be turning 30 in March. I've obviously got a slew of life experiences. I mean, do you even know what GoldenEye on Nintendo 64 is, man?
Morgan: I had a Super Nintendo.
Morgan: N64 is always good. We played it. When we go to the beach, we have an N64 out there...
O'Reilly: All right. Hold that, we're going to totally talk about video games in five to eight minutes. How big are you on Netflix? Is it a thing in college still? Do 30 people use one account? What's the deal there?
Morgan: I love Netflix, personally. I pay for my account, and all of my brothers and cousins and...
O'Reilly: What a good citizen.
Morgan: It's terrible. But they're still in school and are not paying for their account.
O'Reilly: They use yours?
Morgan: They do.
Morgan: So, I'll get on, and it's like, "Oh, you're using too many screens!" So I have to go and upgrade my screen because my brothers are using it at the same time I am, which is annoying.
O'Reilly: Right. How long have you been a member?
Morgan: Probably four years.
O'Reilly: Oh, so you got this before you graduated.
Morgan: Yeah, I got this when they started streaming and putting out shows.
O'Reilly: You know when they got me? This was probably four or five years ago now. I got them because I wanted to see Mad Men, and this was one half of Netflix's business and distribution was sending me DVDs in the mail. That's when they got me.
Morgan: I bought a TV for my room, and I couldn't get a cable box for my room, so I was like, "Well, I guess I'll get Netflix."
O'Reilly: "I'll go get a $20 DVD player." OK. So, you hear us talk about Netflix and stuff all the time. Can you imagine a world without it?
O'Reilly: Are you a Prime member?
Morgan: Amazon Prime? My mom is. I use her account. It's kind of a chain-down thing.
O'Reilly: What do you think of Amazon Prime's content? What do you watch on there?
Morgan: I don't watch anything on Amazon Prime.
O'Reilly: You're killing me, man. Check out Mozart in the Jungle. It's really good.
Morgan: I use Prime shipping all the time, though.
O'Reilly: I bet you do, yeah. That's the reason I'm able to survive living in Alexandria. I got rid of my car.
Morgan: Especially the same-day shipping, I can order something at 10 o'clock and it's on my porch when I get home at 8:00. It's awesome.
O'Reilly: So the world keeps getting better for all Netflix watchers. Talk to me about video games. My perspective on it is... I was a sophomore or junior in college, and I went home for the summer and was hanging out with one of my high school buddies. We log on to Xbox Live, and we played, I think it was Halo 2, maybe. These 11-year-old kids kicked the crap out of me. I accepted my fate that my days of playing video games with any level of proficiency were over. Do you play games? Talk to me.
Morgan: I do. I just switched over from Xbox to PS4, mostly because...
O'Reilly: You and everybody else.
Morgan: Yeah. Except my brothers.
O'Reilly: Why? Do they like Halo?
Morgan: Yeah. One of my brothers is big into video games, so he's got the PlayStation, the Xbox, and the Wii. He's like, "I play multi-player on Xbox, I play single-player on PlayStation, and I want Super Smash Bros."
O'Reilly: So we actually have a decent sample size here. It's not statistically significant, but there's three of you, right? They're younger, right?
O'Reilly: Do you guys work for, save money, and try to buy the video games you want? Or is it just a birthday/Christmas-type thing when you get all this stuff?
Morgan: For me, it was more birthday/Christmas. For my middle brother, he was big in video games, so if he wanted one, he'd get it. If it comes out, he's getting it.
O'Reilly: OK. So, you're still into all this stuff.
Morgan: Yeah, like the Star Wars Battlefront game, I play that a lot. It's pretty good.
O'Reilly: That was a good commercial. Anna Kendrick? What was she, in her bathrobe, like, "If you strike me down, I will become more powerful than you can possibly imagine!" So, anyways -- where do you see the industry going in the next five years? Obviously, you've got your own personal experiences and insights from your brothers.
Morgan: I'll keep playing. A good game will come out and I'll binge-play it for a week or two, then I'll slow down and not play for a while. But if a new game comes out... I think I'll get the new Just Cause game. It's pretty awesome. It's kind of like Grand Theft Auto but not present time.
O'Reilly: Do you think you'll ever do the virtual reality stuff? Have you ever done that?
Morgan: I've never done it.
O'Reilly: You need to go upstairs. Have you done the Oculus Rift here at HQ?
O'Reilly: The Fool, for listeners who aren't aware, we have an Oculus Rift somewhere in the office. I haven't seen it in about six months. Anyways, I used it. It's the headset, you put it on, it's got the crazy goggles and you can -- I think it was one of the Half-Life games. Remember those? Anyways, it's a shooting game.
Morgan: I've seen a couple things like that. You can wear a vest, and if you get shot, you can feel it.
O'Reilly: That's insane. That's a whole nother level. I just had the headset on, and I got motion sick. My understanding was, one of the guys who set me up with it upstairs, he said I need to play it for 20 minutes per day for a week for that to even start to go away. I felt sick. I was like [groans].
Morgan: Yeah. I don't get motion sick very easily.
O'Reilly: Because your eyes think you're moving.
Morgan: But you're not. I'll try it. It sounds pretty cool.
O'Reilly: Before we move on, I wanted to point our listeners to a newly redesigned focus.fool.com. There, you'll discover is special offer to join The Motley Fool's Stock Advisor newsletter for all Industry Focus listeners. All loyal IF listeners have access to a special discount on Stock Advisor that works out to $129 for a full two-year subscription. Just go to focus.fool.com to take advantage of this offer.
So, Austin, video production editor extraordinaire. We're going to talk about something that we share a love of -- if I understand it -- craft beer.
Morgan: I do like some craft beer.
O'Reilly: I didn't really care about it until I was out of college. When you were a broke college student, was it just PBR all day, or did you guys pony up some money for some quality at some point? Not that PBR isn't quality, because, they won the World's Fair or whatever.
Morgan: When I was stocking my own fridge, I'd buy some decent beer.
O'Reilly: A little Sam Adams?
Morgan: Yeah, some good stuff. But after the first couple beers, it doesn't really matter what you're drinking.
O'Reilly: Brutal honesty!
Morgan: You can buy a lot of cheap beer and a couple good ones and you're good to go.
O'Reilly: Would you say your friends are the same?
O'Reilly: What's your favorite?
Morgan: I think my favorite beer is the Bell's Two Hearted.
O'Reilly: I see that floating around the office here. Are those yours?
Morgan: No, they're not. They're really good.
O'Reilly: I'm an IPA man.
Morgan: It's an IPA.
O'Reilly: OK, good. Does it have a heart on it?
Morgan: No, it's got, I think, a fish, like a trout.
O'Reilly: That's another good one, Dogfish Head, 60 minute and 90 minute IPAs.
Morgan: Not a huge fan of Dogfish Head.
O'Reilly: Why do you hate America? I'm kidding.
Morgan: Another one that I had, I went to a small beer store in Merrifield, I think it's just called Beer and Wine or something, next to Open Rd.? It's called Escape from Colorado. It's really good. It's an IPA, but it's not overly hoppy. It's a really mellow IPA. It's really good.
O'Reilly: This is the moral of the story for investors -- the amount of choice...
Morgan: Oh, it's insane.
O'Reilly: It'll blow your brain. There's no way. I was home for Thanksgiving in Indiana, and a new huge grocery store, I can't remember the name, their pitch is "farm fresh," it's huge. Their beer and wine section was the size of a Safeway here in D.C. It was enormous. And the amount of beer was crazy.
Morgan: You ever been to Total Wine?
Morgan: It's like, aisles of individual beers.
O'Reilly: Yeah. So, my question, bringing this back around, it hasn't been approved yet, but I think it will be Anheuser-Busch (NYSE:BUD) is buying SABMiller. They're going to have like 48% market share of beers on planet Earth. It's going to be a huge company. They'll own Budweiser, they're actually getting rid of Coors but they'll have the Miller brands.
Morgan: They're getting rid of Coors?
O'Reilly: Yeah, it's convoluted. The global beer industry is rather incestuous. We can talk about it later. They've been snapping up craft beers, but, really, this is a play on distributing Budweiser and Miller, the major brands, in emerging markets like Africa and South America, and they'll obviously have a stranglehold on America and Europe. But do you know anybody that still buys Budweiser, Miller High Life, or anything like that?
Morgan: I mean, if we're having a party, people will buy it. Sure.
O'Reilly: So it's the Fourth of July, buy a case of 24...
Morgan: Exactly. If you're going to buy a bunch of beer, you're going to buy something cheap that's not awful.
O'Reilly: Something that gets the job done.
Morgan: Exactly. You're not going to spend $25 on a case of Corona when you have a bunch of friends coming over. You'll spend $15, and if they want better beer, they can bring their own.
O'Reilly: So, based upon the emergence of craft beers, I shouldn't be super depressed if I'm Anheuser-Busch.
Morgan: No. There's always going to be kids in college.
O'Reilly: So, the last thing I wanted to talk to you about... this is a big question: Are you ready?
Morgan: I'm ready.
O'Reilly: How many times did you pay for a movie ticket this year? Actually pay and go to the movies, no streaming.
Morgan: I think I've gone to the movies probably about eight or nine times this year. I like movies, I'm a big movie fan. If a good movie is coming out, I'll go see it.
O'Reilly: So, you saw the Avengers and blah blah blah. Did you see Star Wars last week?
Morgan: I did. I liked it.
O'Reilly: Did you go with the Fool?
Morgan: I did. I guess I didn't pay for that one.
O'Reilly: Well, no.
Morgan: I was at the movie theater.
O'Reilly: Yeah. So, the reason I asked was, really the only people who are consistently making money right now are NBC Universal, which is, of course, owned by Comcast (NASDAQ:CMCSA), and Disney (NYSE:DIS). Do you see that changing? What kind of movies do you see? Do you think you should just buy Disney and not worry about it, is that it?
Morgan: Sounds like it. I'll go see, like, if a comedy comes out -- a decent one.
O'Reilly: You saw Trainwreck, didn't you?
Morgan: I did. My girlfriend wanted to see it, so I was like, "I'll go see it. It looks funny."
O'Reilly: I couldn't believe what a great job LeBron James did in that.
Morgan: Yeah, it wasn't terrible.
O'Reilly: Forget basketball. This guy needs to be an actor.
Morgan: A little better than Shaq.
O'Reilly: Oh, gosh. I haven't thought about that Steel movie that he did in, like, 20 years. Do you ever pay up -- this is the last question related to movies -- for IMAX or the crazy 3D, the $20 tickets, you know what I'm talking about.
Morgan: Yes, I will pay for that.
O'Reilly: You will!
Morgan: I will. As long as the theater's not full, I want a good seat. I'm fine with paying for that. I'm not going to sit in the front. I'm going to sit in the middle.
O'Reilly: What did you see with the crazy IMAX and the glasses?
Morgan: I think I saw Mad Max. If I'm going to go see something action-filled, I'll do it. I won't do it for a comedy or a drama. It's got to be action, stuff flying everywhere, explosions.
O'Reilly: Are you going to see Star Wars again in IMAX? I kind of want to do that.
Morgan: Yeah, if I was going to go see it again, I would see it in IMAX. I wouldn't go see it in another small theater or normal one.
O'Reilly: Cool. Well, Austin, thanks for joining me.
Morgan: Of course.
O'Reilly: Have a good one. Happy holidays!
Morgan: Until next time.
O'Reilly: If you're a loyal listener and you have questions or comments, we'd love to hear from you. Just email us at firstname.lastname@example.org. As always, people on this program may have interest in the stocks they talk about. And The Motley Fool may have formal recommendations for or against those stocks, so don't buy or sell anything based solely on what you hear on this program. For Austin Morgan, I'm Sean O'Reilly. Thanks for listening and Fool on!
Sean O'Reilly has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com, Imax, Netflix, and Walt Disney. The Motley Fool recommends Anheuser-Busch InBev NV. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.