Ben Thompson Explains the XBOX Disaster

This is our full conversation with Ben Thompson. We discuss why Microsoft's Xbox strategy failed, why he thinks GTA 6 should cost $200, how console wars shaped the modern gaming industry, what went wrong with Xbox Game Pass, why AI is reshaping competition across tech, the future of Microsoft's gaming business, and why regulators often block mergers at exactly the wrong time. TBPN is made possible by: Ramp - https://ramp.com Public - https://public.com Cisco - https://www.cisco.com Console - https://www.console.com CrowdStrike - https://www.crowdstrike.com Figma - https://www.figma.com MongoDB - https://www.mongodb.com NYSE - https://www.nyse.com Railway - https://railway.com Shopify - https://www.shopify.com/ Codex - http://openAI.com/codex Sign up for TBPN’s daily newsletter at TBPN.com Follow TBPN: https://TBPN.com https://x.com/tbpn https://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231 https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235 https://www.youtube.com/@TBPNLive

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00John Coogan?

  Ben Thompson, the founder of Stratechery, he's been on an absolute tear during a slow news cycle. Does it feel like a slow news cycle to you?

• 0:10Ben Thompson?

  I don't know. The summer is always slow. I, you know, I take a couple of days. I slow down a little bit myself.

• 0:17John Coogan?

  I feel like you've done a good job of like providing really insightful and interesting pieces during a slow time where I didn't know that I wanted to.

• 0:26Ben Thompson?

  I'm doing you a favor.

• 0:27John Coogan?

  Yeah, you are. Yeah, I didn't know I wanted you to adopt the voice of Mark Zuckerberg for 20 minutes and go on a tear. But it's not like that was driven by like a specific, okay, there's a Wall Street Journal article where like Bloomberg has a scoop and like, we need to know this. It's more just like resetting on the meta narrative. I want to talk about the meta narrative, but can we start with Xbox?

• 0:49Ben Thompson?

  Sure.

• 0:50John Coogan?

  I want to know, first, let's go back in time a little bit, and I want you to reality check me on the story I tell myself about how Microsoft wound up in the situation it wound up in with Xbox. And I think it stems with DirectX, the, it's the graphics layer that allowed games to be run on multiple graphics cards. So that was a Microsoft licensed piece of property. So this is why we don't have the Chrome box.

• 1:20Ben Thompson?

  You want to go, you want to go really far back.

• 1:23John Coogan?

  Like, because we didn't get an Amazon gaming console. We didn't get a Google gaming console, right?

• 1:30Ben Thompson?

  Right.

• 1:30John Coogan?

  Like, why?

• 1:31Ben Thompson?

  Interesting. So you, well, you go back way back. I mean, we can go really far back.

• 1:35John Coogan?

  Please.

• 1:36Ben Thompson?

  I mean, back in the day, the main technology for doing 3D was coming along was OpenGL. And OpenGL had various pluses and minuses. It was, you know, we're way back in history, but this is the origin of the Nvidia story, making cards to do 3D graphics. You had like the Riva, the 128, then you had the TNT, then you had the GeForce. And like, we're talking back in the 90s when I was, you know, your guys' age or whatever, in college. And, you know, making, the first, you know, Quake comes out, like the real first 3D game, you know, there's actually a really interesting Twitter back and forth with the old id people, talking about Quake and how basically they

• 2:18Ben Thompson?

  obliterated the company by burning everyone out by watching it. But super fun, super fun back and forth. But Microsoft comes out with Direct 3D as an alternative to OpenGL that was, I think, and this is a little out of my area of expertise, but I think was a little easier to use, had more niceties, was more tied into the platform. But this is all sort of PC gaming.

• 2:40John Coogan?

  Yeah.

• 2:41Ben Thompson?

  The Xbox, the way I think about it, and a lot of gamers kind of get annoyed about the gaming stuff because I don't really care about the game part of it. I'm more interested in like the strategy and how that fits in the overall company.

• 2:53Jordi Hays?

  What is your review?

• 2:54John Coogan?

  Yeah, can we get a GTA 6 review?

• 2:57Ben Thompson?

  No. Well, I feel, I feel compelled. Number one, I feel, Rockstar, I think, is charging way too little for this game. They're charging, what, $80?

• 3:05John Coogan?

  Yes. You're gonna get canceled for this. This is a nuclear take.

• 3:10Ben Thompson?

  No, they should be charging like $200 for this game.

• 3:13John Coogan?

  I know.

• 3:13Ben Thompson?

  GTA 6 is like the last great game.

• 3:16John Coogan?

  Yeah.

• 3:17Ben Thompson?

  Like, you think about everything, it was mostly all made pre-AI. Like, it is the pinnacle of this AAA craftsmanship, years and years and years of blood and sweat and tears, to the extent where you have like the Twitter analysts like counting cigarette butts outside of the offices to see, like, how much crunch are they in right now?

• 3:39John Coogan?

  I don't even think he's trading the stock. I don't even think he's trading the stock. I think he just wants to know what GTA is. The love of the game, literally, the game, the GTA game.

• 3:47Ben Thompson?

  Gamers are insane. So I always tread in this water, like, very, very carefully. But, no, so I feel compelled to buy GTA 6, just in honor of it existing, even if I don't know if I'm ever gonna play it. So I'm definitely gonna do that, and I'd be happy to pay, yes, $200. Like, $80 is ridiculous. They should charge more. Anyhow.

• 4:06Jordi Hays?

  Yeah, we had, the youngest person on our team was commenting on people online complaining about the price, and said something like, you didn't have, you had 10 years, you couldn't save up 80 bucks?

• 4:19Ben Thompson?

  Seriously.

• 4:20Jordi Hays?

  Whoever, whoever you are, like, I know kids that do lemonade stands and they clear like 100 bucks, you know?

• 4:27Ben Thompson?

  Oh, absolutely. I, you know, they're all $20, I'll keep the change. Nothing will make a kid's day better than that. Although unfortunately with inflation, I think now it's sort of like expected. It's unbelievable how expensive things are these days.

• 4:37Jordi Hays?

  It's bad.

• 4:39Ben Thompson?

  So, anyhow, GTA 6. But we're, we're back, oh, so the console, the console era. So the way I think about Xbox is you go back to Microsoft, and Microsoft had this whole thing, this is pre- iPhone, this is idea of their corporate strategy was three screens in the cloud. And the idea that we're going to, we already own the desk via the PC, we're going to own the pocket via the phone. And people always used to say that Microsoft missed mobile. Microsoft did not miss mobile. They, like, they came out with a Windows CE in like 1999. Like, they were in mobile, they just had the totally wrong conceptual model because they were basing it around, you know, as an extension of the PC. But then the third screen was the living room. How do we get in the

• 5:23Ben Thompson?

  living room? Well, people have consoles plugged in their TVs. If we can get in and own the console, we can own sort of the gateway to the living room, and we need to earn permission to be in the living room, we will do that by creating the Xbox, the game console. And what's interesting about this is, this is a strategy that totally failed. And it failed for a kind of an obvious reason in retrospect, which is first and foremost, people buy consoles to play games, not to have a portal to the internet in their living room. And so you're selling a multi-hundred dollar sort of console to people who want to play games, but people who don't want to play games aren't

• 6:06Ben Thompson?

  gonna randomly start buying consoles. What actually ended up taking that over was things like the Fire Stick, or, you know, Apple TV may have played this. I still think it's like, probably the best solution, but it's way too expensive. Now, the Apple TV's poor price got jacked to the moon with this recent memory increase. But the Fire Stick is probably a big one. You had the Chromecast, you had Roku TV, you had, you know, these, which ended up being, it's not that, it's a classic Microsoft thing. They were actually right. There was this new front page to online services to be built. They just took totally the wrong approach with Xbox. And what's funny is that this approach actually became this urbores of self-mutilation, because the Xbox

• 6:50Ben Thompson?

  didn't succeed in achieving this because the games console is way too expensive to achieve this. But then also, they killed the Xbox, where Xbox 360 was pretty competitive. And it's, that generation is actually the most interesting console generation. I'm happy to expound on that if you want to. But they come out after that with the Xbox One, I think, which was super expensive, because it had the Kinect built in, that sort of like wave your hands around sort of thing. And it had all, much more like restrictive DRM things, it was gonna be more digital. It was basically that console was designed around, we're gonna realize our vision and own the living room. And gamers hated it. So they rejected it. So their vision, which they

• 7:30Ben Thompson?

  didn't achieve, also killed their console. And so, and the, so my, I wrote over a decade ago, and the whole Xbox saga is filled with regrets, I think, first and foremost for Microsoft, but also for me, because I, from the beginning, is like, they need to kill this program. We need to spin it out or get rid of it. The stated goals, which made sense from a corporate perspective, were not achieved, and it is continuing to exist because it exists. And I was actually sympathetic to that. I worked at Microsoft from, from 2011 to 2013, when Microsoft was in the

• 8:11Ben Thompson?

  dumps. And, you know, they were, still had a great business, but their stock had been like $40 for like a decade. And, and the one thing the employees has, like, well, at least we have Xbox, all the cool kids over there. Like, it was such an important thing to corporate culture to have Xbox, even though this was a totally failed division in terms of achieving corporate goals, and also was sort of self-immolating because it was trying to achieve corporate goals that it was not going to achieve.

• 8:38John Coogan?

  Yeah. What do you think the naming scheme says about that project? I always found it very odd that they went from Xbox to Xbox 360. That sounds like the third, it's actually the second. Then Xbox One is the third, but it's one. And then now they're on Series X, which feels like the 10th, but it's the fourth. And then they have a bunch of subnames. It feels like they just didn't, they never leaned into just like Xbox 2, Xbox 3, Xbox 4.

• 9:06Ben Thompson?

  Yeah. Well, you're asked, I mean, maybe it shows I worked at Microsoft, you're asking the wrong guy about naming things, I think. But, yeah, total mess. They called it the 360 because it was coming out the same generation as the PlayStation 3.

• 9:16John Coogan?

  And they wanted to jump forward.

• 9:17Ben Thompson?

  And so they wanted to, well, they wanted to be on the same level. Like, we both have sort of a 3 in our name. So what's interesting about the PlayStation 3 is, the PlayStation 3 was Sony's big misstep in terms of the whole PlayStation era. What, they had this crazy processor called the Cell processor that had all these capabilities. And they had, up to that point, consoles were differentiated by hardware. And so Sony famously helped, one of the reasons they beat Nintendo was they had desks, so they could have much larger, like, media and things along those lines. And whereas Nintendo was sticking with cartridges. And there was like other, like, they were much more favorable to third-party developers. Just in general, they had sort of

• 9:58Ben Thompson?

  taken over PlayStation 1 and 2. PlayStation 3 comes along, they produce this, oh, they wanted to get Blu-ray off the ground. That's another example of consoles getting screwed up by trying to attempt to other corporate priorities. They, it worked.

• 10:13John Coogan?

  Yeah, didn't they win? And didn't Xbox go with HD DVD and they lost?

• 10:18Ben Thompson?

  They did. But at the end of the day, what happened was the PlayStation 3 was way too expensive. I think it ran super hot, if I remember. And all these extra capabilities were not used. And the reason they weren't used is that was the first HD generation. And you had this shift to 3D games and high-definition graphics. And what happened was, it used to be games differentiate themselves by how well they wrote the game, like, how did it perform on your Super Nintendo, on your Nintendo. Now we move to a world of actually all the actual game was offloaded to engines, game engines. Like, you know, it had one, Unreal, obviously it was Epic, got super big with the Unreal Engine. And so you no longer did that. What a game company did was actually

• 10:59Ben Thompson?

  design the game and then asset creation. And asset creation at HD was way more difficult, way more expensive than it was for, for standard definition TVs. And so the economic imperative for developers came, we can't just be on PlayStation. We need to be on everything. And so that was the ultimate generation, and almost every game was made to run everywhere. Run on PS3, run on Xbox 360, and run on the PC. And that was-

• 11:29Ben Thompson?

  Also, the Xbox 360's best, best generation.

• 11:32John Coogan?

  Yeah.

• 11:32Ben Thompson?

  That was the one they were the most competitive on because they had all the games, because all developers were making them sort of run everywhere. They had a very simple to develop for architecture. The 360 was very PC-like, even more so than the one sort of previously. And that was their best generation. And then they come back, the next generation, shoving Kinect on people's throats. We're gonna own the TV. And meanwhile, Sony learned their lesson. They're like, okay, we can't differentiate on hardware. We need to create sort of generic hardware that is easy to develop for. And the way we will differentiate is through exclusives. They bought a bunch of small studios, in contrast like buying Activision.

• 12:09John Coogan?

  Yeah.

• 12:09Ben Thompson?

  Which we can get to a little bit. They bought a bunch of small studios and pushed all those studios to developing killer games for the upcoming PS4. And so you got things like, like the Spider-Man, like, uh, that was a huge game.

• 12:22John Coogan?

  Naughty Dog, Last of Us, that type of stuff.

• 12:25Ben Thompson?

  Exactly.

• 12:25John Coogan?

  Yeah.

• 12:25Ben Thompson?

  I mean, and so the PS4 was an unbelievable generation.

• 12:29John Coogan?

  Yep.

• 12:29Ben Thompson?

  And in, and a lot of the reasons unbelievable was because it had these exclusive games. And they just crushed Microsoft. Because for all the cross-platform games, the Call of Duties, the Maddens, things like that, those are always ran everywhere. And so what you do is you limit the economic potential of your studios, because you're only building for your platform. And you make it back by all the licensing fees you get off the EA's of the world and the Activision's of the world. Because 80% of gamers are on your console, not on the other guy's console. And so they just wiped out Microsoft in that generation. Um, and that really just continued to the PS5. Uh, and this is where we sort of get to the, the Game Pass disaster.

• 13:11John Coogan?

  Okay, yes, so, uh, yeah, I wanna, yeah, let's just jump forward to that.

• 13:16Ben Thompson?

  All right.

• 13:16John Coogan?

  How is it a disaster?

• 13:17Ben Thompson?

  I didn't want to ramble too long, I was gonna give you a chance to jump in.

• 13:20Jordi Hays?

  No, we love it, we love it. Yeah. I have a bunch of other questions, not related to gaming, but I like, I love this history.

• 13:27Ben Thompson?

  Oh, I think the console, the console history is fascinating. It's really interesting how sort of, because it tracks technological change to such a large extent. And it totally shifted sort of strategies, so.

• 13:36Jordi Hays?

  And I think you can draw, I think you can draw a lot of real parallels to even just model releases over the last couple of years. How, you know, certain decisions around one model sets you back a certain, you know, they're, they're iterating a lot faster. But I'm, I'm seeing parallels.

• 13:51Ben Thompson?

  Yeah, the, the sort of development of, of, yeah, it's interesting. You could always just sort of draw, draw, draw lessons. So you get to, Microsoft, at this point, again, I think I wrote at the time, oh wait, time to give up. Like, I wrote multiple times over the years, they should give up on Xbox. And, uh, and at this point, Microsoft's stock's doing much better.

• 14:10John Coogan?

  Was there ever an option after they bought, uh, Activision, just to make Call of Duty a console exclusive? Or would that have been an FTC problem?

• 14:17Ben Thompson?

  Well, we, we, we'll get to that, because that's part of the story here. So Microsoft decides, okay, uh, what we, we're gonna actually try a new business model. It's true, Xbox sort of selling a console, selling, uh, you know, licensing it, we kinda do that. But we're actually moving to being a services company. The stock's doing much better now, you know, like we have Azure, all the, all these things. What we need to do, and the way we compete with Sony, is we need to have the exact opposite of the Sony strategy. And we need to lean into services, lean into subscriptions. We're gonna do Xbox Game Pass. And the idea of Xbox Game Pass is, instead of buying every individual game for $60, $70, $80.

• 15:00Ben Thompson?

  Gaming pricing, by the way, really has stayed suppressed probably far longer than it should have been, particularly for the AAA games. But we already got to that with Rockstar. So they're, they're like, you pay one price per month and you get access to all the games and Game Pass. Well, of course, no publisher wants to partake in this. Because they make all their money upfront by selling games to their biggest fans. You, you know, it's kind of like the movie model, you make a bunch of money upfront, and yet, in the long run.

• 15:28Jordi Hays?

  Were they looking at like, at, at what happened to the music industry as an example of saying like, yeah, it's cool to make your product more accessible, you get, you know, more listeners by bundling them streaming.

• 15:39Ben Thompson?

  Right, well, that was the, that was the bet. You had to make it up in volume, right? And so this old, this why the Series S came about, there's the Series X and the Series S. The Series S was a more underpowered, but much cheaper model. I think it launched at $300 versus the X was, I think, $600 or maybe 500. And that was also a problem, because you're kind of neutering the X. Because developers build to the lowest common denominator, not, not sort of the highest one. So that was one problem. But the idea was, we're gonna expand the market. And they have these package deals where you get an S and you get Game Pass for a year. And it's this sort of thing. And, uh, we will make it up. And the problem is, no, no independent developer is gonna go for that. So they had some of their own games, but they went out and started buying a bunch of developers.

• 16:24Ben Thompson?

  So they bought Bethesda, which included, I think, it at that point, uh, and, and Zenimax, I don't know, the, uh.

• 16:31John Coogan?

  Yeah, the Elder Scrolls, like, they, they have a bunch of like, great IP libraries.

• 16:35Ben Thompson?

  That's right.

• 16:35John Coogan?

  But those, uh, but those developers just aren't releasing like incredible titles annually, except for Activision. Which does have a release date.

• 16:44Ben Thompson?

  Exactly. And so the issue, so the issue with buying these companies is, they're, what you're paying for is you're paying for their existing business plus the premium. And their existing business was selling single copies of games to all platforms. And what they were saying is, we're going to basically force all these studios to take a bath. To lose a ton of money by putting all their games on Game Pass. We'll still sell on PlayStation, because we have to, because that's a lot of money. It'd be massively economically destructive not to. But what we think's gonna happen is gamers are gonna realize, I could be paying $70 a pop on PlayStation,

• 17:25Ben Thompson?

  or I could go to Xbox and I could pay $20 a month and I can get all these games, and that's it. What a better deal. And by the way, we'll get new gamers. People are gonna come in and realize, wow, I can get all these games for $20 a month. Uh, none of that happened. All they did was cannibalize their existing business. They didn't expand the market for console gamers. All they did was have gamers who would have paid way more to play these games, pay way less to play these games, and Microsoft ate it. And they, I think they, you know, the recent reporting was they expected to have 75 million Game Pass subscribers by this year. They have like 30 million, and that number is actually decreasing, it's not going up.

• 18:07Ben Thompson?

  And so it's just been, uh, and so that, that's sort of the context of what's happened here.

• 18:12John Coogan?

  Yeah.

• 18:12Ben Thompson?

  Uh, Phil Spencer got, uh, retired, which, uh, if you retire at that level of a company, um, you're probably canned. Uh, probably too late, the whole strategy was a disaster. They brought in new leadership. And now there's sort of like a reset going on. They're, they're laying off a few thousand people.

• 18:29John Coogan?

  Yeah.

• 18:30Ben Thompson?

  They, they say all games production are gonna continue, but there's a real sort of critical decision here. What do we do? Because we ended up getting stuck in the middle. Like, and we're just, it, it, this doesn't work.

• 18:46Jordi Hays?

  What, uh, what did you read into their approach of laying off 1,600 people now and keeping a 1,600-person riff?

• 18:55Ben Thompson?

  I mean, it's a terrible idea.

• 18:58Ben Thompson?

  Everyone there for the rest of the year is like, well, I'm gonna get laid off next.

• 19:01Jordi Hays?

  Like, every VC would tell you to like, cut hard, cut deep.

• 19:05John Coogan?

  And then move forward with the team. If you're on the ship, we're going to Valhalla together or something.

• 19:10Ben Thompson?

  I think, I, I do have some sympathy, because, uh, the reality is, I appreciated the note. Um, because they are in big trouble. And there's an, there's an aspect of just stating it clearly, we're not sugarcoating it. And if they laid out how much trouble they were in, and then only cut 1,600 people, then everyone kind of knows they're gonna be cutting more people, right? So I, I think they're just in a bad spot. So of course it's not great, it's gonna destroy morale, it's gonna destroy everything for the next year, because everyone's waiting to get fired. But there's a bit, they did, I think, tear the Band-Aid off to the extent they could. And now there's just a, now they can be very overt.

• 19:52Ben Thompson?

  They could go through and actually talk to employees about, what are you working on? Why should you still be here? And, uh, it's a reflection of the employment climate, like, like people in general are more, they're just not gonna bail. Microsoft, you know, they're gonna want to keep their job. And so they can probably, hopefully, fingers crossed, do better cuts by virtue of doing them in the open. Um, but I don't know, I mean, I don't envy, I don't envy Xbox's leadership at all. It's gonna be a very tough thing, but I, I, I could totally understand how they are where they are.

• 20:24John Coogan?

  Probability of a spin out.

• 20:27Ben Thompson?

  I mean, I think it, I think it needs to happen like I, I, but you know, this is again, the regret is this was my take for years and years and years. I'm like, okay, fine. Next one's game pass. That kind of seems kind of interesting. Let's go for it. It should have stuck to my guns. They're like, no, stop. This is going to be a disaster. Um, I think, yeah, I don't, I, I, I don't get it. Um, I just don't, I didn't see it before. The thing that got me to say, okay, let's give it a chance. Didn't work. I don't see it now. I mean, I think it does give me pause. They hired Matthew Ball, who had that on Strategery multiple times.

• 21:00Ben Thompson?

  Uh, as their chief strategy officer. I have a lot of respect for, you know, his takes. So I'm curious what he's thinking about. This gets to the question before. Is there a bit where they just write off these acquisitions and say, actually, all this stuff's going to be exclusive now. We're like Call of Duty, buy an Xbox. Uh, like basically giving into the FTC's worst fears, which, uh, but they, those fears didn't make sense at the time in the context, uh, because it's by writing off.

• 21:31Jordi Hays?

  What's funny, what's funny is that would test.

• 21:33Ben Thompson?

  We lost billions and billions of dollars.

• 21:35Jordi Hays?

  Yeah. And it would, it would test, it would be a good pricing test for the power of a triple A game to say, okay, you can only get Call of Duty on Xbox now. And you would see like how, like, how many incremental Xbox sales do you get? Because that means the real value of the game is actually in the hundreds of dollars. If people have a PlayStation.

• 21:55Jordi Hays?

  And then they'll try something new. Uh, switching gears a little bit, uh, we keep having this experience where there's a company, you know, an AI company, let's say an application layer company that is, or lab that is, you know, hot, but then you don't hear very much for a few months and you write them off and then they come out and they've like added hundreds of millions of dollars of revenue and are doing a crazy up round. And it's this weird thing where like even, you know, historically, you know, there's power laws everywhere, but I feel like in this moment, we're seeing more and more examples where like the 10th best company in the category is still having the financial performance that a company that would have been the leading company in their category five years ago. What do you make it? What do you make of that?

• 22:42Ben Thompson?

  This is just a thing in tech in general that that is always sort of stuck out at me. I mean, I, I think I.

• 22:48Jordi Hays?

  Has it been, has it been though? But like, like CRM, for example, like if you go back to like 2015 was like the 10th best CRM company, like actually printed.

• 22:58Ben Thompson?

  No, of course not. No, the, the, the example I always go back to is, um, I think it was 2014 or so and Apple bought Beats and they bought Beats for $3 billion and everyone's going, the tech press is going crazy. Everyone's writing thought pieces about it. And I'm like, you know, of course writing about it. I'm like, $3 billion, like Apple is a $500 billion company. What does $3 billion matter? And what's funny about that take is number one, it was right. Who cares about $3 billion? That's in our couch cushions. Like people were spun up about something that didn't really matter. Number two, Apple is only a $500 billion company. Like the, the astronomical increase in valuation and numbers around this is absolutely crazy. So to your point, yeah, a 2019 CRM company, number one, there probably wasn't a number 10 even then. But yeah, the numbers are not even remotely tied to like any, I just sort of let them go and be like, I write down the numbers and they don't really mean anything to me.

• 23:50Ben Thompson?

  Um, but it's very hard to keep track of. Like the inflation in tech numbers specifically, you know, you think that, uh, what was I complaining about pricing before? Oh yeah. Lemonade stands are bad. Uh, Silicon Valley lemonade stand inflation is absolutely the worst in the world.

• 24:06John Coogan?

  Um, on mergers and acquisitions, uh, there's this news today about Getty Images calling off Shutterstock deal after UK regulators said that they would have to sell the editorial business for the merger to be approved. And it seemed very odd to me that a merger would be blocked by a regulator when that industry that is consolidating and is maybe becoming more monopolistic is under such insane attack from generative AI. I can't imagine a better defensive move than putting Getty Images and Shutterstock together.

• 24:43Ben Thompson?

  This happens, this is, this happens every single time. Like the, the natural response to your overall category being threatened by an external force is consolidation. Like it's the only way to defend yourself to sort of, you know, you get synergies, like, like all these companies are pretty established. So it's actually fairly easy to price. You know exactly what things are. It's a much like, if you have growing companies, you want to merge them or acquire them. It's really unclear because how do you sort of price out the future? These companies are declining. So it's very easy. Like you could do a discounted cash flow and understand exactly how much they're worth. It's a very straightforward negotiation. It makes total sense for them to consolidate. But precisely because they're knowable and understandable, it's very easy for regulators to block them.

• 25:29Ben Thompson?

  And you see this happen again and again. You see like pushback on, you saw this with TV and like, like different networks getting together and the various pushbacks happen to that. We're in telecoms. Like the, this happens, this is a natural pattern. The moment that a company, an industry wants to consolidate, needs to consolidate, is the moment regulators are most likely to stop them consolidating. And whereas the actual time when action would matter, like when it, when it's growing and a company is making the right acquisitions to take over an industry.

• 26:00Ben Thompson?

  Regulators don't do anything and also rightly don't do anything because you're dealing with the future and it's unknown. You don't want to screw it up. Um, it raises the question of what you do regulators sort of do. Anyway, in broad, broad strokes, I used to be, I've sort of, you know, I think that they probably do more harm than good as far as a lot of these sort of blocking mergers and things go. But, um, I don't know. I'm the one that just said, maybe Microsoft should take Call of Duty exclusive. So, so who knows? Uh, maybe all that.

• 26:32Jordi Hays?

  Yeah. We had a funny moment because we were looking, it's a $3.7 billion deal, but I'm like, how is this a $3.7 billion deal? Both these are two, 300 million ish market cap companies. And it was because they, the deal was like priced back in January of 2025. And so both companies had declined so much.

• 26:51John Coogan?

  Combined market cap's under a billion now.

• 26:52Jordi Hays?

  Over the last 18 months.

• 26:54John Coogan?

  And so maybe they shouldn't do the deal anyway. I don't know.

• 26:56Ben Thompson?

  I mean, it could be worse. You could be Netflix and have the stock market and sort of like make a bid for Warner Brothers that the stock market hates, abandon the deal, but they already decided you did the deal because you're desperate and you're screwed anyway. So, um, yeah, they, you don't even get what you bid for. So, uh, maybe that's what happened here. I don't know.

• 27:12John Coogan?

  Oh, well, well, thank you so much for taking the time to come chat with us. Have a, uh, have a great summer. Uh, enjoy the break and we'll see you soon.

• 27:21Jordi Hays?

  Yeah. Good luck with the lemonade stands.

• 27:23John Coogan?

  Yes.

• 27:24Jordi Hays?

  Try to, try to make it through summer.

• 27:25John Coogan?

  Stay solvent. Don't go into that. You're going to run up on a kid that has Klarna.

• 27:29Ben Thompson?

  Raise some money. Yeah. Yeah. Klarna and a lemonade stand.

• 27:32John Coogan?

  Klarna and a lemonade stand. Five easy payments. Interest free. Interest free. It might. Well, thank you so much and have a great rest of your week.

• 27:39Jordi Hays?

  Great to see you.

• 27:40John Coogan?

  We'll talk to you soon, Ben.

• 27:40Ben Thompson?

  Yeah. Talk to you later.

• 27:41John Coogan?

  Have a good one.