Iran War Will Cost Every Household $50,000

Ed Elson speaks with Justin Wolfers to unpack the latest developments in the war, including what the ceasefire really means and how to interpret the Defense Department’s proposed budget. Then, Rich Greenfield joins the show to analyze Netflix’s post-earnings stock drop and assess how Disney’s new CEO is performing. Finally, Ed explains why AI’s growing backlash may be less about technology, and more about rising wealth inequality. Justin Wolfers is a Professor of Economics and Public Policy at the University of Michigan. Rich Greenfield is the Co-Founder and TMT Analyst at LightShed Partners. Get your tickets to the Prof G Markets tour Subscribe to the Prof G Markets Youtube Channel Check out our latest Prof G Markets newsletter Follow Prof G Markets on Instagram Follow Ed on Instagram, X and Substack Follow Scott on Instagram Send us your questions or comments by emailing [email protected] Learn more about your ad choices. Visit podcastchoices.com/adchoices

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

• 0:00Speaker 00

  When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.

• 0:30Speaker 01

  Energía baja, falta de concentración, nebla mental? You might be dehydrated. Gatorade Zero Powders han sido diseñados científicamente para ayudarte a mejorar el balance de hidratación en el cuerpo. Hechos con la mezcla número uno de electrolitos, sin colores ni sabores artificiales. Shop now online or at retailers nationwide. Gatorade: Hydrates Better Than Water. Is it in you? Signos de dehidratación leve y moderada. Consulta a tu médico si los síntomas persisten.

• 1:00Speaker 02

  Welcome to Sephora.

• 1:01Speaker 03

  I'm looking for a perfume that's not too perfumey?

• 1:05Speaker 02

  I got you.

• 1:06Speaker 04

  Serum moisturizer or moisturizer syrup.

• 1:09Speaker 02

  Let's get into layering.

• 1:11Speaker 03

  My concealer is making me look worse?

• 1:14Speaker 02

  Sounds like the wrong shade. Let's get you matched.

• 1:18Speaker 00

  There's only one store that really gets what you're going for. Get beauty from people who get beauty, only at Sephora.

• 1:24Speaker 02

  Hi, I...

• 1:26Speaker 03

  Let's get you a basket.

• 1:29Ed Elson?

  Today's number, 4.5. That's how many gallons of alcohol the average Romanian male drinks each year. That's roughly 70% more than the average American, but it's 70% less than cash per tale.

• 1:47Speaker 06

  Money markets, Matt. If money is evil, then that building is hell.

• 1:57Ed Elson?

  Welcome to Prof G Markets. I'm Ed Elson. It is April 21st. Let's check in on yesterday's market vitals. The major indices fell as relations between Iran and the US remained strained ahead of the ceasefire deadline. Oil prices rose but still remained below $100 a barrel. Shares of Fermi, the AI data center company that we predicted back in October would implode, plunged 20% after several top executives, including the CEO, resigned. And finally, Apple stock dropped roughly 1% after hours on news that Tim Cook is stepping down in September. He will be replaced by Senior Vice President of Hardware Engineering, John Turnus.

• 2:41Ed Elson?

  Okay, what's happening? The US-Iran ceasefire expires tomorrow and tensions are mounting. Both countries' delegations are headed to Pakistan to engage in talks ahead of the deadline. President Trump said it's "highly unlikely" that the ceasefire would be extended if a deal was not reached before Wednesday. He also said the US would continue to blockade the Strait of Hormuz until a deal is signed. And the meeting follows an active weekend of fighting. On Friday, Iran announced it would reopen the Strait of Hormuz after Israel and Hezbollah agreed to a ceasefire. Stocks soared to record highs on that news. However, Tehran reversed

• 3:22Ed Elson?

  course after the US refused to lift its own blockade. Then on Sunday, the US Navy fired on an Iranian cargo ship, and Iran threatened retaliation. Oil prices rose yesterday and stocks slipped. So, here to give us the update on the war and what it means for us and for the economy, we're speaking with everyone's favorite, our favorite, Justin Wolfers, Professor of Economics and Public Policy at the University of Michigan. So, Justin, the ceasefire might end tomorrow. That's at least the deadline. I mean, there's a lot to get into, but I guess my first question is, does that even matter? Because, you know,

• 4:06Ed Elson?

  this weekend we heard from Trump that Iran violated the ceasefire. Iran said that we violated the ceasefire. We saw this news where we actually did fire. Out an Iranian cargo ship. So I just can't tell if this is even meaningful at all. What do you make of it? Does this change things for you?

• 4:28Justin Wolfers?

  Yeah, I think none of us can make anything of anything. So I want the audience to feel really good about themselves if they feel lightly confused right now. Now, there's a reason we've always felt lightly confused about the Middle East, which is it's a long way away. If you miss a day in the news cycle, 17 things happen. Some of the nut words and the places are very long. It's not central to our lives. Many of us lose track of many Middle East stories. In fact, I've been trying very hard to keep track and not let anything go by. And still I'm confused because we have one extra layer that we don't normally have, which is we have no idea what the truth is.

• 5:07Justin Wolfers?

  I'm not being funny.

• 5:08Ed Elson?

  Yeah.

• 5:10Justin Wolfers?

  There was a time when someone said the following is a red line. You would understand it to be a red line. There was a time when someone said these are the conditions. You understood it to be the conditions. There was a time when someone said we've reached an agreement. You would understand that they'd reached an agreement.

• 5:25Justin Wolfers?

  So none of those things are true right now. And we've seen in many cases that no one, including markets, knows whether to believe the American president or the Iranian leadership more.

• 5:39Justin Wolfers?

  That's actually not a joke. Okay, so that makes our lives hard, but no one cares about you and I, Ed. We're just two extraordinarily handsome blokes talking in the wall.

• 5:50Justin Wolfers?

  But I think what makes it harder is how do you resolve this?

• 5:57Justin Wolfers?

  In some sense, let me describe something completely unrelated that happened to me this week.

• 6:03Ed Elson?

  Yes.

• 6:03Justin Wolfers?

  And hopefully we can draw the analogy. And I was talking to a young fellow about Mexico. He was talking about how Mexico should behave and what they should expect when NAFTA, which has been renamed several times, comes up for renegotiation. What should Mexico look for? What should they be worried about? What's going to happen? And at face value, that seems like a very sensible and important question.

• 6:30Justin Wolfers?

  But a different view is that the president is unilaterally torn up NAFTA now four or five times, which is another way of saying any time NAFTA yields outcomes that are not perceived to be in America's best interests, the president doesn't abide by it, whether it's in Mexico's best interests or not. Another way of saying that is we've lost the ability to contract over time. There is no NAFTA. There literally can't be a NAFTA.

• 7:04Justin Wolfers?

  If I were to say, Ed, I'm gonna marry you, which would be beautiful, but I just didn't come home on Tuesday, and then I came back a week later, and then I didn't come home on Thursday, and I didn't cook dinner for you on Friday, are we married?

• 7:26Justin Wolfers?

  So there's sort of two types of agreements you can do. There's a paper, scissors, rock agreement, which is I'll do something and you'll do something, and we'll both do it at the same time, not really paper, scissors, rock, and it's in both of our best interests, right? For instance, this interview, you said, Justin, I'll meet you at four.

• 7:44Justin Wolfers?

  It's not live, folks, sorry.

• 7:47Justin Wolfers?

  But Ed said, I'll meet you at four P M, and I said, okay, I'll meet you at four P M. And we're able to contract intra within time. At this time, I'll turn up and you'll turn up. But Ed, if you developed a reputation for never turning up on time, Right. I wouldn't have turned up, and vice versa. And so we've lost, let me bring all this from Mexico and from you and I back to the Middle East. If we never do what we say we're going to do, we can't form agreements over time. Right. We can't say, you give something up today and I'll give something up tomorrow. It becomes impossible. Right. And so therefore, the range of plausible outcomes narrows, and it takes off the table

• 8:30Justin Wolfers?

  every outcome in which we ask the Iranians to do something good in stage one and we get something good in stage two, because they know we will not deliver in stage two. And this is the deep sense in which this is the exact opposite of the art of the deal. You think about all the possible futures that could occur and the president has taken off the table a whole bunch of them. That worries me deeply.

• 8:56Ed Elson?

  Yeah, I mean, it seems as though we can't really trust anything that's being said. In addition, the deals that are being quote unquote made don't really turn out to be deals. They break the agreements of those deals and then they say that the deal is off, but then they continue to say that there's a deal and say that there's going to be a deadline for that deal and then talk about extending the deadline and or renegotiating the deal, et cetera, et cetera. And so we're supposed to kind of play this game of, oh, let's follow along with the story. There's going to be a ceasefire and then they're going to extend it. But ultimately, as we kind of began, like, none of it really means anything. So

• 9:40Ed Elson?

  the question becomes for us, how do we actually determine what is real and what isn't?

• 9:47Justin Wolfers?

  Right.

• 9:48Ed Elson?

  And, I mean, one thing that I do consider to be real, and I'd like to be to get your views on this, is the fact that the administration has proposed a one and a half trillion dollar defense budget for 2027.

• 9:59Justin Wolfers?

  Yeah.

• 10:00Ed Elson?

  Which makes me think, okay, this is all noise. This is all nonsense. Gas prices are continued to be elevated. I think they're up more than 30% since the war began. It seems as though this is only going to continue. At least that's my sense, but maybe I'm being pessimistic. What do you think is real? Like, what are some real signals as to what will happen versus fake or meaningless?

• 10:27Justin Wolfers?

  Great. There's a lot of meat in the questions you just asked. So let me come back to what you said about deals. I have a proposal for you, Ed. Let's agree to never use the word deal again.

• 10:39Justin Wolfers?

  And I mean that in the interest of honesty. What the president calls a deal is not, I promise I will give up this and you will give up that. Promise means I'm going to follow through.

• 10:50Ed Elson?

  Right.

• 10:51Justin Wolfers?

  What he has at the moment is press releases.

• 10:54Justin Wolfers?

  And what he's capable of delivering is if you do this and I do this and it's in your best interest and it's in my best interest, we can get there, which is basically a small set of possible outcomes. The stuff where that we can get Iran to do the stuff Iran wants to do and in return, America will do the stuff America wants to do today. That's it.

• 11:14Ed Elson?

  Yeah.

• 11:16Justin Wolfers?

  You don't even need a deal. You could just send someone a text message and say, hey, have you thought about doing this? So deals are a bad idea. I wanted to take you away from your question, then I promise to come back to it.

• 11:32Justin Wolfers?

  What has the president achieved over the last week? I actually think he's achieved something. So Iran showed that it has control over the Strait of Hormuz.

• 11:39Ed Elson?

  Yep.

• 11:41Justin Wolfers?

  That's actually very important and a major loss to the United States. When someone reveals a weakness that you had, that's as bad as them creating a weakness.

• 11:55Justin Wolfers?

  And so if eight weeks ago Iran didn't understand itself to have leverage, it had never had the opportunity to test it. Today it does.

• 12:06Ed Elson?

  Yeah.

• 12:07Justin Wolfers?

  So it's as if they'd created an American weakness, as if they'd won it in war.

• 12:13Ed Elson?

  Right.

• 12:14Justin Wolfers?

  By the way, we saw the same thing happen in the trade war with rare earth minerals.

• 12:18Ed Elson?

  I was just gonna say, that's exactly what happened there. Yeah.

• 12:21Justin Wolfers?

  Yeah, what if we, there's, it's two data points, there's too much to draw a law from, but what if we learn that this world is wildly interdependent, more so than most of us appreciate?

• 12:32Ed Elson?

  Yeah.

• 12:33Justin Wolfers?

  The moment you try and chop off an arm, all of a sudden you discover interdependencies and up there seems to be, at least those two stories tell us that that may be a fairly general thing.

• 12:44Justin Wolfers?

  Okay.

• 12:46Justin Wolfers?

  The president has also showed that we have the ability to blockade Iran. Now, we probably knew that two weeks ago, but we definitely know it today. I want to just enjoy a moment of irony with you, Ed, because you are the person in the world I most want to share this with. In 2025, the president started the trade war, which made it harder for ships or more expensive for ships to enter the United States. And retaliatory tariffs made it harder for ships to exit. Effectively, in 2025, then, the president imposed a small bore blockade on the United States. He blockaded the American people and he did that because he loved them.

• 13:31Justin Wolfers?

  In 2026, he's imposing a blockade even more severe. It's no longer a 30% tariff. It's now a Obama to Smitherines tariff, but it's still a big tariff. He's blockading the Iranians. He's blockading the people he hates. Guy's got one hammer, blockade, and it turns out you blockade people you love and you blockade people you hate. I have a feeling you're not going to succeed on both missions. In fact, it could be. My view of the world is a blockade hurts both sides. And so it hurt Americans last year and it's hurting Iranians this year. But even if I'm wrong, if it was helping Americans last year, it's got to be helping Iranians.

• 14:15Justin Wolfers?

  Or if it's hurting Americans last year, it's hurting Iranians. But it does suggest these are wildly incongruent policies.

• 14:24Ed Elson?

  Yes.

• 14:24Justin Wolfers?

  Okay. You asked about one and a half trillion, is that right?

• 14:28Ed Elson?

  Yeah.

• 14:28Justin Wolfers?

  Let's go there. There is, I have a deep feeling from studying history, that wars are really, really, really important moments. That we rewire the world in deeply important ways. And it's not as simple as like with a trade war, you throw on a tariff and you take it off and you hope that we can hug it out and all get back to normal. I have a sense from history that wars are turning points.

• 14:56Ed Elson?

  Yes.

• 14:58Justin Wolfers?

  I don't know what the turning point is with this war. But your question points to one of them. So to just to bring everyone up to speed, the United States had a military budget last year of roughly nine hundred billion. The president has just proposed in his budget fifteen hundred billion, one and a half trillion. So six hundred billion dollars more. That's for next year. That is normally when we're talking about budget numbers, we're talking on a ten year period, right? So if the question in your mind is how much more dangerous did the world just get? And how much more has the United States made it so other countries feel they have to arm themselves? And therefore, if we want to maintain military superiority, how much more do we have to spend in this arms race?

• 15:43Justin Wolfers?

  And we call it an arms race for a reason. We have an answer from the White House. We need another six hundred billion a year. Now, you're very good at long division, right, Ed?

• 15:57Ed Elson?

  Always with the math questions live on air.

• 16:03Justin Wolfers?

  Mate, long division. Come on. Long division is a superpower. I wish someone had told me this in school. We're spending another six hundred billion dollars. And I'm going to make it easy for you. I'm going to say there's a hundred and twenty million American households. How much more are we spending per household?

• 16:24Ed Elson?

  I can't do this live on air, Justin. You're you're killing me with these with these math questions. Do you know the answer? Can you tell us?

• 16:32Justin Wolfers?

  Well, no, I just did it in my head.

• 16:34Ed Elson?

  Please, Justin.

• 16:35Justin Wolfers?

  Because it's easy, Ed. It's five thousand dollars.

• 16:42Ed Elson?

  Five thousand.

• 16:43Justin Wolfers?

  Okay, because you can just divide both sides by a million.

• 16:46Ed Elson?

  Right.

• 16:46Justin Wolfers?

  Right? Now you got, you know, six hundred divided by twelve, six hundred divided by one hundred and twenty. That's why I chose one hundred and twenty. It's actually one hundred and thirty million. So five thousand dollars per household. Per year.

• 17:01Justin Wolfers?

  Okay, and I'm now going to give you the easiest one. If the president keeps this up for a decade, how much does that add up to for a typical household?

• 17:09Ed Elson?

  Fifty thousand.

• 17:10Justin Wolfers?

  You are so good at this. You should be less self-conscious about doing math on air. That's incredible, and I hope your your audience understands and appreciates your mathematical acuity.

• 17:21Ed Elson?

  That's right.

• 17:23Justin Wolfers?

  So basically, the president has decided that he has made the world so much more dangerous that he needs to spend it over the next decade an extra fifty thousand dollars per household.

• 17:38Ed Elson?

  Yeah.

• 17:40Justin Wolfers?

  By the way, if you spend fifty thousand per household, you have to tax fifty thousand per household. That is just accounting.

• 17:49Ed Elson?

  Yeah.

• 17:50Justin Wolfers?

  So another way of saying this is the president is imposing a fifty thousand dollar tax hike because of this adventure. Now, I'm not going to go the next step and say that's bad or wrong. That's a question of personal judgment. If we were freeing ninety million people from a life of oppression, that's a price that might be worth paying. Probably not if you're an America-first guy, but you might be a humanitarian-first guy. But this is, the point of your question, Ed, and I think it's really significant, is if you believe the president about our future military needs, he's imposing very, very, very large, very meaningful costs on the American people.

• 18:33Ed Elson?

  Which is likely a signal, it seems, that this is going to continue for some time. I mean, whether it's this or something else, something related to this. I mean, it's hard, it's hard not to assume that that that we're not approaching the end game here, especially when nothing meaningful happens in these headlines. And I think the next question, although we do have to wrap it up here, is what this impact would be and will be on the economy. The big question for investors seems to be not whether oil prices will be high. They already are high. We already know that. The question is whether they will remain high and remain elevated. And from what I'm hearing...

• 19:18Ed Elson?

  It wouldn't be a bad bet to assume that they will.

• 19:21Justin Wolfers?

  Right. So when the president declared war, the thing that was interesting, he said, we're going to go in for four to six weeks, but 2027, 2028 and 2029 oil price futures all rose.

• 19:32Ed Elson?

  Yeah.

• 19:32Justin Wolfers?

  Now, actually, last Friday, when it looked like peace was about to break out, they fell quite substantially. And so it looked like people really genuinely believed there was something good happening on Friday. Just before I came on air with you, I checked the latest betting markets on Kolshe, where you can bet on how long until the straits reopen and the flow of oil is back to normal. And for sure, no one believes that four to six weeks was ever going to be true. But they're talking about months rather than years. So let me break that down there. That says that direct, what's going on in Iran with the Strait of Amos is a months-long issue. The world, though, is more dangerous and

• 20:16Justin Wolfers?

  will remain more dangerous for years. And I think the thing that's really, and so that's why you're going to continue to see oil price futures substantially elevated, because there's now a risk. We don't know who's going to do what, but there could be a next chapter in this story.

• 20:32Ed Elson?

  Exactly.

• 20:33Justin Wolfers?

  And then the final deeply depressing thought I want to leave you with is if 2025 is the year of the unprovoked trade war, and 2026 is the year of an unprepared war war,

• 20:47Justin Wolfers?

  it's time for folks in markets to think about what 2027 holds and 2028. If you extrapolate, then you should be building in a pretty big risk premium. And if you're an optimist, you think, well, the bloke has rolled the dice a couple of times. Surely you'll learn by now, and we're going to go back to incredibly competent technocratic economic policy any day now. And I got all my fingers and toes crossed.

• 21:13Ed Elson?

  Justin Wolf is professor of economics and public policy at the University of Michigan. Justin, we always love having you. Thank you for joining us.

• 21:20Justin Wolfers?

  Pleasure, mate.

• 21:23Ed Elson?

  After the break, an update on the streaming wars. And by the way, we are heading out on tour at the end of May. So for more info and to get your tickets, head to profiteymarketstour.com.

• 21:41Speaker 00

  When you need to build up your team to handle the growing chaos at work, use Indeed sponsored jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs.

• 22:11Speaker 01

  Energía baja, falta de concentración, nebla mental? You might be dehydrated. Gatorade Zero powders han sido diseñados científicamente para ayudarte a mejorar el balance de hidratación en el cuerpo. Hechos con la mezcla número uno de electrolitos, sin colores ni sabores artificiales. Shop now online or at retailers nationwide. Gatorade: Hydrates better than water. Is it in you? Signos de dehidratación leve y moderada. Consulta a tu médico si los síndomas persisten.

• 22:40Speaker 02

  Welcome to Sephora.

• 22:41Speaker 03

  I'm looking for a perfume that's not too perfumey.

• 22:46Speaker 02

  I got you.

• 22:46Speaker 04

  Serum moisturizer or moisturizer syrup.

• 22:50Speaker 02

  Let's get into layering.

• 22:51Speaker 03

  My concealer is making me look worse.

• 22:54Speaker 02

  Sounds like the wrong shade. Let's get you matched.

• 22:58Speaker 08

  There's only one store that really gets what you're going for. Get beauty from people who get beauty. Only at Sephora.

• 23:05Speaker 02

  Hi, I, uh...

• 23:07Speaker 03

  Let's get you a basket.

• 23:14Ed Elson?

  We're back with Profty Markets. Two of the biggest names in entertainment hit a rough patch last week. Netflix reported relatively strong first quarter earnings. Revenue rose 16% and net income jumped nearly 83%. But those results were overshadowed by weaker-than-expected second quarter guidance, which sent the stock down 10%. Additionally, co-founder and chairman Reed Hastings announced that he will leave the board in June, ending a nearly 30-year run at the company he built. Meanwhile, at Disney, the new CEO Josh Demaro has begun laying off... Roughly 1,000 employees. Marvel Studios was among the hardest hit as nearly its entire visual development team was shown to the exit. So here to help us break all of this

• 23:58Ed Elson?

  down, we are joined by Rich Greenfield, co-founder and TMT analyst at Lightshed Partners. Rich, good to see you. Thank you for joining us. I want to start here with Netflix earnings. Seemingly strong quarter when you look at the revenue, when you look at the earnings, but ultimately Wall Street hated it. And I can't quite tell if it's the guidance, or if it's Reed Hastings leaving, or maybe something else. What do you make of it?

• 24:26Speaker 04

  I think it's a combination of both. I mean, look, you, they did better than people thought, just a little bit, but they did a little bit better than people thought in Q1. I mean, growing 16% is certainly nothing to sneeze at. That is a very healthy growth rate. Remember, it was just a couple of years ago where growth sort of went sub 10%. That's when they launched advertising and, you know, there was sort of this entire panic of like, was growth over for Netflix? And then launched advertising, content sort of to do really well again, and growth surged back into the teens. And I think, Ed, the problem right now is that investors are worried. When you put up a good quarter and you don't raise the full year, you sort of signal the second quarter is going to be a little slower. What does everyone assume?

• 25:06Speaker 04

  They go, well, 16, 14, 12, 10, and then eight. Like, they just start assuming the worst. And I think, you know, we, we've been through this before where investors fear sort of a meaningful revenue slowdown. I think Netflix is very, very focused on maintaining, you know, mid-teens-ish revenue growth over the long term. And I think, you know, it's still very early in the advertising. I mean, you think about it, this is a 50 billion plus revenue company and advertising is a few billion. So it's still very early days as they ramp up their advertising, not just in the US, but in the 12 markets where they have it around the world. And so I think you add in the fears of not raising guidance in a stock that had sort of bounced off the bottom from the whole

• 25:51Speaker 04

  Warner situation. And then you poured salt in the wound by having Reed Hastings leave the company, which no one expected. And the reality is, I find it very hard to believe that Reed Hastings would be leaving if the company was in trouble.

• 26:05Ed Elson?

  Uh huh.

• 26:06Speaker 04

  And so I feel like this is probably a sign of his confidence in the long term.

• 26:10Ed Elson?

  Right.

• 26:11Speaker 04

  Whereas I think the street is obviously concerned that, oh my God, is he leaving? Because the growth story is over and I just, I can't imagine the company that he is synonymous with and built and created a fortune off of, I don't believe he would be, you know, quote unquote, abandoning ship if he wasn't very comfortable in the direction the ship was heading.

• 26:30Ed Elson?

  What do you think is sort of the long term vision for the company right now? Because it seems like they're at this, almost like an inflection point where, I mean, they were looking at Warner Brothers and that seems to be sort of more of a legacy IP original content play. But at the same time, they're experimenting with ads or more than experimenting, they're really growing it into a real business line at this point. And I even saw recently that they're looking at short for, like a short form video feature. It seems like that there are these two kind of trajectories and perhaps you could even put in talks about getting involved in parks or physical assets in some capacity. I mean, when you look at the business right now, what is the long term trajectory?

• 27:14Ed Elson?

  What are they trying to do at this point?

• 27:16Speaker 04

  I think it's still relatively simple, Ed. They are sub 10% of time spent on television. Forget about phones, we'll get to that in a second, but they are sub 10%. YouTube is substantially larger.

• 27:30Ed Elson?

  Yeah.

• 27:31Speaker 04

  You know, you obviously took TV in totality is far larger. I mean, yes, they Netflix dwarfs everybody but YouTube in a streaming world, but when you look at it on a total TV, meaning if you were to take ABC and ESPN and Disney Plus and Hulu, Disney is still bigger than Netflix in total. So, you know, like that's why the whole story during the whole WBD acquisition attempt, when people were saying, oh, Netflix is a monopoly. I mean, it's sort of absurd. They're still sub 10% of the market for TV content. And so I think the goal, honestly, is to capture more time spent. I mean, I think that is, you look at something like.

• 28:10Speaker 04

  K-pop Demon Hunters. I think Netflix got its first real taste of a true franchise. Yeah. Sure, Stranger Things was very successful. I don't mean to diminish the the power of that content in any way, but when you look at the K-pop Demon Hunters and how this thing has, even when there isn't a fresh piece of content, movie around it, you look at how like McDonald's has Happy Meals around it right now. I mean, everywhere you look, this content is resonating around the world. Right. You know, I think trying to build more franchises, they obviously understood how important it was and how much value it drove. And so I think that's a big piece of it. But then, look, I I think the other piece that you really have to think about in terms of Netflix's

• 28:55Speaker 04

  future is there's still a relatively lightly used app on on on phones. Yeah. And, you know, most of the viewing is really on TVs, a little bit on laptops, but they are not what you do on your phone. You do TikTok on your phone. You watch clips of Professor G Markets on Instagram, right? You're doing that on X, but like, you know, how many times do you turn on and watch a full-length, you know, I'm watching Night Agent right now. I'm watching it on my TV, not on my phone, right? Like, sure, there are certainly examples where there's live sports events that are happening and you want to watch it and you're not home and you can watch the fight, you know, you could watch that Mike Tyson fight on your phone for sure, and it works great. Right.

• 29:39Speaker 04

  But I think figuring out how to capture more of your time spent on your phone is a huge focus. And so they just launched a new kids platform called Playground, trying to actually create more for kids to do in a safe, controlled way on phones. They're also, you know, investing in, you know, video games. There's no doubt that they see that. And then vertical video. And again, if it's just clips, I mean, Disney's done the same. And I know you mentioned Disney earlier. Yeah. They've recently launched something called Verts, both in their ESPN app and inside of the Disney Plus app. No real original content that I've seen, it really looks mostly like reformatted and often not even so great reformatted because you're sort of squishing 16 by nine into

• 30:24Speaker 04

  vertical. I think, you know, over time, it'll be interesting is does Netflix, when they launch this, do they come out with actual original content? Like, are they going into the, you know, we've seen of these micro dramas and different types of sort of vertical video native content made for a vertical viewing audience?

• 30:44Ed Elson?

  Yes.

• 30:45Speaker 04

  I have no idea if Netflix is going to do that or not, but I think whichever media company, tech platform replicates what we've seen on some of these overseas platforms, I think that could be a big unlock, not to the ultimate subscription business, but I think, you know, time spent on mobile, and I think right now, time spent on mobile is not any of these major media company streaming companies, right? Like, it is not Disney Plus, it is not Netflix. Like, the winning on mobile is all of these sort of very specific platforms like TikTok that are made for mobile.

• 31:21Ed Elson?

  Yes.

• 31:22Speaker 04

  And so, I want to see these companies compete in mobile content consumption. It hasn't happened yet, but I'd love to see it.

• 31:28Ed Elson?

  Hundred percent. Yeah, it's sort of a question of like, what is the golden goose for these companies? And to your point, they've been treating it as the TV. I think the TV versus phone dichotomy is a good one, but there is a question.

• 31:40Speaker 04

  It's where you make your money. It's where you make your money. I mean, there's no doubt it's where you make your money.

• 31:44Ed Elson?

  Yeah.

• 31:44Speaker 04

  But everyone who has Netflix probably has it on their phone.

• 31:48Ed Elson?

  Yes.

• 31:49Speaker 04

  They're not using it all that much. How could you increase time spent? And especially now that you're in the ad business.

• 31:55Ed Elson?

  Right.

• 31:55Speaker 04

  Once you're in the ad business, more time spent has a direct correlation. It's not like, hey, more time spent builds value so you can raise price. Sure, you don't churn, but now actually view time has a direct correlation to revenue.

• 32:09Ed Elson?

  Yes.

• 32:09Speaker 04

  Because you can actually drive advertising. And so, I mean, as you know, obviously, with what you do all day, whether it's sponsorship or advertising, there's a huge opportunity. And you see Netflix getting more into podcasting, right?

• 32:21Ed Elson?

  Yeah.

• 32:21Speaker 04

  Which also fits well in a vertical environment. You know, they're getting into even a little bit of news. I mean, you saw the Brian Williams pod, you know, it's going to be called like a weekly podcast, but. You know, again, you're inching into new formats and new genres of content. And I think the goal is, again, time spent.

• 32:40Ed Elson?

  Yes.

• 32:40Speaker 04

  I honestly believe this is all they care about is how do they win time spent? And I think that this is a huge part of that push. And sure, longer term, do they want to do more Netflix houses? They've opened up two of them. There's more on the way. You know, in terms of destination or location-based entertainment. But I don't think that's going to be the bread and butter for a long time. I think this is still capture more time on TVs. Grow the user base, especially outside the US where there's still a lot of room to grow outside, especially in Asia. And then figure out how you win in mobile. And, you know, the initial way they thought was gaming. I wonder if now kids slash vertical video

• 33:24Speaker 04

  might be a better answer than than mobile games.

• 33:27Ed Elson?

  Hundred percent.

• 33:27Speaker 04

  Which is very competitive.

• 33:29Ed Elson?

  Yeah, really interesting. Before we let you go, new Disney CEO Josh Demare, he's about a month into the job. He just laid off a thousand employees. If you had to give him a grade on how he's done so far, maybe it's impossible. But what do you make of his tenure so far?

• 33:43Speaker 04

  That's like you laying off two employees, just to be clear, on an analogy basis, right? Like, they did not lay off like, you know, it's not like Meadow, right? Meadow is talking about laying off 10% of the company. This was not a 10% layoff. So they probably could do 10x that pretty easily at Disney and no one would know. I mean, I would feel bad for those employees. But the point is, all of these media companies have accumulated far too many employees over the years. That's part of the huge opportunity facing, you know, David Ellison as he acquires Warner Brothers, right? It's just tons of duplicative employees and lots of middle layers of management. I think for Josh Demare, this is a great first step. I mean, it's showing you he's willing to make moves.

• 34:24Ed Elson?

  Yep.

• 34:24Speaker 04

  I think the bigger move that everyone has their eyes on is what is the right structure for Disney? Does Disney need to be in the linear TV business? You know, that while at the end of the day Paramount is buying all of Warner Brothers, the big unlock that set off this bidding war was being willing to separate out linear television. Obviously, you saw that is what Versant and NBC did. I think the big question is, is Disney's ABC and ESPN?

• 34:53Speaker 04

  Long-term part of the company? Or is Josh, you know, again, this is a small layoff in the scheme of things, but is it signaling a willingness to sort of rewrite the strategic future of Disney? And I think he hasn't had his first earnings call. I mean, there's a lot to come over the course of the next several weeks and we'll see. But it's an exciting time to sort of see when Bob Iger took over, you know, he made a very strong right-hand turn from Disney as an animation company to going, hey, we don't have the tooling inside. We've got to go out and buy Pixar and then of course Marvel and Lucas after that. But there was a big strategic decision in buying Pixar that set off a huge run at Disney over the years.

• 35:33Speaker 04

  I think we're going to be all eyes on whether there's something strategic up Josh's sleeve as he starts out? Or whether it's sort of just continue on with the path that Disney's been on?

• 35:44Ed Elson?

  All right. Rich Greenfield, co-founder and TMT analyst at Lightshed Partners. Rich, appreciate your time. Thank you.

• 35:50Speaker 04

  Thanks for having me, Ed.

• 35:56Ed Elson?

  Here's a question for you. Who in America is more excited about AI than fearful? Well, a recent poll suggests the answer is quite simple. Rich people. Yes, it turns out when you ask Americans if they think AI will do more harm than good, and you categorize them by income, the only demographic group whose majority believes it will be a net positive for society are people who make more than $200,000 per year. Meanwhile, among people who make less than $100,000, only a third believe it will be a net positive. And then among people who make less than $50,000, only a quarter believe it will be a net positive.

• 36:39Ed Elson?

  In other words, how you feel about AI is almost directly proportional to how much money you make. If you make a lot of money, you feel good about it. And if you don't, you feel bad. And the question is, why? Well, to us, the answer is quite obvious. And that is that AI stands to make rich people very rich and keep poor people probably poor. This isn't really conjecture. This is based on what we already know. Since ChatGPT was released in 2022, the top 1%, which owns half of the entire stock market, has added a collective $15 trillion to their net worth. Meanwhile, the bottom 40% of Americans who don't own stocks haven't seen any of those

• 37:21Ed Elson?

  gains, and their electric bills have risen 17% in part because of the extraordinary energy consumption of data centers. Now, we've talked a lot about the AI industry's popularity problem and how that might or might not have led to the violent attacks on Sam Altman last week. But I would argue that all of this isn't so much about Sam Altman or OpenAI or AI at all. When you get down to it, all of this is about wealth inequality, and the proof is clearly in the polling. I talk more about this in my latest edition of my newsletter, Simply Put, which is out today. You can read it at simplyput.profgmedia.com.

• 38:05Ed Elson?

  Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, edited by Joel Patterson and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Shalane, Isabella Kinsel, Krishna Donahue and Mia Silverio. And our social producer is Jake McPherson. Thanks for listening to Prof G Markets from Prof G Media. If you liked what you heard, give us a follow. I'm Ed Elson. I will see you tomorrow.