Barry Diller to Hollywood: The Boat Has Passed on Competing With Netflix

IAC chairman Barry Diller tried to give the entertainment industry a bit of a reality check  at Wall Street Journal’s WSJ.D Live conference in Laguna Beach, Calif. Tuesday, telling his audience that there’s no way for anyone to catch up with Netflix and Amazon. But don’t rely on ads either, his advice continued, but advertising-supported businesses are doomed.

They are so far ahead of everyone else, it’s impossible to compete with them,” Diller said about Netflix. The only viable competitor to Netflix was Amazon, he argued — which isn’t good news for Hollywood either. That’s because the company has a completely different business model, using content to lure people into their e-commerce empire. “That’s a business model that entertainment has never had to compete with,” he said.

In the past, Hollywood responded to emerging competitors by acquiring them, said Diller: “Guess What? They ain’t buying Amazon, and they are not going to buy Netflix.”

Diller also had some harsh words for the AT&T-Time Warner merger, calling it meaningless. “That’s simply a hedge against the decline of their own assets,” he argued, adding that the idea to keep running Time Warner as an independent company wasn’t exactly a vote of confidence. “That doesn’t seem like a model that makes much sense to me.”

But while it may be too late to jump on the subscription bandwagon, Diller wasn’t very optimistic on ad-supported businesses either. “If you are going to build a business based on advertising, go home,” he said. With Facebook and Google dominating this space, and programmatic ad buying bringing down ad rates, there was simply no way to make money with ads alone, he argued.

However, Diller said that even Google would be unable to catch up with Netflix and Amazon in the video space, despite having YouTube at its disposal. “They missed moving into subscription content,” he said. “The boat has passed.”

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