Michael Smith on Video Streaming and Its Lessons for Higher Education

Episode Summary

Executive Summary: Mike Smith argues that streaming and higher education are both being reshaped by technology that reduces scarcity: in entertainment, incumbents survived by shifting from protecting distribution to fulfilling their mission of creating great content; in higher ed, he says a similar shift is needed because elite universities are financially and morally unsustainable, and new tech plus alternative credentials could broaden access and weaken brand-based exclusivity.

Main Topics: Streaming disruption and the survival of studios (Priority: 5/5): Smith explains that studios initially underestimated Netflix, Amazon, and Google, but later adapted by treating technology as a tool for delivering entertainment rather than a threat to old distribution models. Why streaming now looks like a crowded sandbox (Priority: 4/5): He describes the current streaming market as a competition among pure plays (Netflix), tech-backed firms (Amazon, Apple), and legacy studios with deep catalogs, and says the outcome is still uncertain. Higher education as the next disruption target (Priority: 5/5): Smith draws a direct parallel between Hollywood and universities, arguing that higher ed has remained stable for 500 years only because it controls scarce resources like classroom access, faculty access, and credentials. Credentialing, brand, and data as substitutes for elite exclusivity (Priority: 5/5): He argues that university brand power can be weakened the same way consumer brands were weakened by Amazon ratings, Airbnb reviews, and data-rich talent evaluation systems that can verify skills directly. Equity, pricing, and the unsustainability of the current model (Priority: 5/5): Smith contends that current higher education is both financially and morally unsustainable because it excludes many capable students while pricing rises faster than inflation and aid often benefits wealthier families. Alternative models: online scale, employers, and institutions like ASU/SNHU (Priority: 4/5): He points to Southern New Hampshire University and Arizona State as examples of institutions using technology to scale access and hold down costs, and suggests employers may increasingly help educate and credential talent directly. The future role of faculty and universities (Priority: 4/5): Smith suggests universities may need to refocus on liberal arts, advanced research, and synthesizing expertise, rather than serving as the main vocational credentialing system for white-collar jobs.

Key Arguments: Studios were right historically that the same firms had dominated for a century, but they were wrong that technology could not change the business; the real shift came when tech firms began producing original content and winning awards. Netflix’s early advantage came from deep consumer data and recommendation algorithms, but legacy studios have countered with strong libraries and their own streaming platforms. The important strategic question in streaming is not just distribution but who can combine content, data, and promotion most effectively. Higher education has long relied on scarcity in access to classrooms, experts, and especially credentials; MOOCs changed access to classes but not the value of the degree signal. Brand value in higher education can be reduced when better information becomes available, just as Amazon reviews and Airbnb ratings reduce reliance on brand names. Current higher ed is financially unsustainable because tuition has risen much faster than inflation, while only a minority of education costs are covered by tuition. It is morally unsustainable because it excludes students largely on the basis of wealth, ZIP code, and access to prep resources rather than potential. Universities are incentivized to protect selectivity and spending because rankings reward selectivity, spending per student, and alumni giving. A fairer system would let more students demonstrate ability through alternative pathways, and employers are already beginning to look beyond elite degrees. Higher education should not be the sole gatekeeper for white-collar jobs; it should focus more on broad education and advanced scholarship while new pathways handle vocational credentialing.

Data Points: Same studios dominating motion pictures: 100 years - Used to illustrate why studio executives believed their business was stable until streaming disruption intensified. Higher education institutions dominating the sector: 500 years - Used by Smith to show how long universities have appeared durable and immune to change. MOOC hype period: 2012 - Referenced as the moment when many predicted online education would transform higher ed, though those predictions did not fully materialize. Tuition growth vs. inflation: 4x faster than inflation - Smith says traditional college tuition has increased at this rate for the last 40 years. Tuition coverage of education costs: About 20% - He says student tuition typically covers only about one-fifth of the actual cost of educating a student. Southern New Hampshire University tuition: $10,000/year for a decade - Cited as evidence that technology can stabilize pricing while serving large numbers of students online. Top 1% chance of attending a highly selective university: 1 in 4 - From Raj Chetty’s study, cited to show elite access is heavily skewed toward wealthy families. Bottom 20% chance of attending a highly selective university: 1 in 300 - From Raj Chetty’s study, used to demonstrate class-based barriers in access to elite schools. Relative likelihood ratio: 77 times - Smith’s approximation comparing elite access for top-income students versus low-income students. Alternative income-based aid threshold at Princeton: Under $100,000 family income pays nothing - Mentioned as an example of financial aid that helps, but only after admission. Aid distribution statistic: More aid per student to families earning >$100,000 than to families earning < $20,000 - Used to argue that financial aid often disproportionately benefits already-wealthy families. Scale of major online institutions: More than 100,000 students - Applied to Southern New Hampshire University and Arizona State University as examples of scaled online education.

Pivotal Quotes: "My mission is creating great entertainment and getting that entertainment in front of the audience." — Mike Smith: Used to explain how studios shifted from defending old distribution models to using technology to serve their core purpose. "Our current system of higher education is financially unsustainable... morally unsustainable." — Mike Smith: Central claim in his book project about why higher education must change. "If we in higher education genuinely believe that rich kids just happen to be 77 times more likely to deserve an elite education, then we're doing great." — Mike Smith: Provocative statement highlighting inequity in elite university admissions.

Implications: The conversation suggests streaming and higher ed both face information-driven disruption. Winners will be institutions that redefine their mission, use technology to expand access, and adopt skill-based credentialing instead of relying on exclusivity.