I’m pleased to present the 448th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
Continuing our tradition for our final podcast of the year, this week Colin and I discuss the top 10 video stories of 2018 - at least in our humble opinions. Once again it has been a very active 12 months, with lots of innovation and change. Colin and I have had a great time analyzing and discussing the critical industry trends each week and we hope you’ve enjoyed listening to our thoughts in 2018.
Let us know what you think of our choices, whether you agree or disagree!
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I’m pleased to present the 445th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
On this week’s podcast Colin and I explore the pay-TV industry’s record high video subscriber losses sustained in Q3 ’18 (more here and here). The two big satellite services, DirecTV and Dish Network were major contributors. But perhaps more important was a dramatic slowdown in subscriber additions for the two biggest virtual pay-TV operators, Sling TV and DirecTV Now.
As we discuss, with these virtual services in flux and not stanching the bleeding of traditional multichannel TV, the critical underlying trends of cord-cutting and cord-nevering burst onto full display in Q3. Meanwhile, the strategies and success of virtual services like YouTube TV, Hulu Live and others is murky at best. All of this shows how unstable the pay-TV industry as a whole currently is.
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Last Thursday, Comcast reported a loss of 95K residential video subscribers in Q3 ’18, an improvement over the 134K it lost in Q3 ’17. Losing subscribers is never something to be celebrated, but amid the onslaught of skinny bundles, SVOD, cord-cutting, etc. the improvement was noteworthy (and certainly reflected the fact that AT&T slowed its promotion of DirecTV Now in Q3 ’18, which is why it gained just 63K skinny bundle subscribers, down from 323K a year ago).
For Comcast it was a welcome relief from Q2 ’18, in which it lost 140K video subscribers, over 4x the 34K it lost in Q2 ’17. On its Q2 earnings call, Comcast executives acknowledged that skinny bundles were taking their toll, and yet they did not seem to articulate an aggressive response. But Q2 ’18 also saw the addition of 260K residential broadband subscribers, up from 175K adds in Q2’17. Given how highly saturated the residential broadband market now is, this jump seemed surprising, and yet, it was barely explained on the Q2 earning call.
I’m pleased to present the 438th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
On this week’s podcast, Colin and I take up the question I explored on Wednesday, whether Comcast should divest its 30% stake in Hulu to Disney, as CNBC reported it is interested in doing. Colin and I discuss the many benefits Comcast derives from having a front row seat with 3 senior executives on Hulu’s board. On the other hand, there are many reasons why Comcast would be compelled to sell.
Meanwhile, as part of its acquisition of Sky, Comcast will also be inheriting Now TV, the innovative OTT service Sky runs. Colin shares his personal experience with Now TV and some of the specific things Comcast might learn and consider bringing to its U.S. operations. As always, rights are a central issue to surmount.
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In the wake of Comcast’s winning $39 billion bid to acquire Sky over the weekend, CNBC has reported that Comcast may be looking to swap its 30% ownership stake in Hulu (plus other consideration TBD), for Disney/Fox’s 39% ownership in Sky (a deal for Comcast to buy that was reported this morning). CNBC said that Comcast sees “only limited value in owning a non-controlling stake in Hulu” given Disney’s 60% share once the Fox deal closes.
This logic is understandable and in addition, divesting the stake would also relieve Comcast of partly funding Hulu’s losses (reportedly almost $1 billion in 2017). On the other side of the coin, Disney would own 90% of Hulu and give up its non-controlling stake in Sky as Comcast takes control of it.
Verizon has announced an aggressive, video-focused offer for its initial 5G launch, underscoring how potentially disruptive wireless telcos could be for both broadband and pay-TV services.
Starting tomorrow morning, residents of Houston, Indianapolis, Los Angeles and Sacramento will be able to visit “First on 5G” to determine whether Verizon 5G Home service is available in their area. If it is, then the service will become available beginning October 1st (though it’s not clear how quick activation would be). The introductory package is extremely compelling and includes:
Topics: Verizon Wireless
For all the talk about cord-cutting over the years, the most important trend in pay-TV these days isn’t consumers dropping out entirely, but rather shifting from traditional multichannel services to lower-priced virtual MVPDs or “skinny bundles.”
The trend of skinny bundle gains offsetting multichannel losses continued again in Q2 ’18 where, according to Leichtman Research Group, the top traditional services lost approximately 800K subscribers. But just the 2 publicly-reporting skinny bundles, Sling TV and DirecTV Now, gained 383K (with the latter accounting for 342K).
I’m pleased to present the 430th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
This week Nielsen released its Q1 ’18 Total Audience Report, which led to some media coverage that linear TV still dominates consumer viewing. However, Colin dug into the data and showed that while this is true for older consumers, for younger ones, the exact opposite is occurring: linear TV is becoming less and less relevant. Colin shares his analysis.
On-demand viewing’s importance was underscored yet again this week by Comcast striking a deal to integrate Amazon Prime Video into its X1 experience. The move builds on prior Netflix and YouTube integrations, helping Comcast broaden X1’s value proposition. However, neither of us thinks the move materially addresses aggressive competition from skinny bundles that drove up Comcast’s video subscriber losses in Q2.
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Comcast will integrate Amazon Prime Video into its X1 platform later this year. Amazon becomes the third major streaming service to be included in X1, following Netflix in 2016 (see here) and YouTube in 2017 (see here). Comcast said it’s the first pay-TV operator to integrate Amazon.
As with the other services, Amazon’s content will become available to X1 users as part of the X1 UI. Comcast is continuing to position X1 as a streamlined gateway to both its own content and also to third-party content. It’s a smart move by Comcast to build more value into the X1, helping justify subscribers spending $10 or more per month to rent the X1 set-top box (although Comcast has recently been emphasizing it sees X1 also as an interface, living on smart TVs and devices, as well).
I’m pleased to present the 429th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
On today’s podcast, Colin and I discuss Comcast’s Q2 results, which it reported yesterday. While broadband subscriber additions were up to a record 260K, video subscriber loss accelerated to 140K.
Although Comcast management admitted on the earnings call that low-cost skinny bundles are to blame, no strategy was articulated for how Comcast will respond. By positioning itself as a “connectivity” provider that doesn’t have a low-cost OTT/direct-to-consumer alternative, Colin and I believe that Comcast’s 21 million video subscribers are very vulnerable to being picked off by skinny bundles’ aggressive promotional offers (DirecTV Now from AT&T being at the top of the list). If that happens video sub losses will accelerate in coming quarters.
We’re both puzzled by Comcast’s seemingly passive approach to defending its core video business and discuss potential explanations. Broadband’s saturation and the coming deployment of 5G both seem to limit the upside of the connectivity strategy as well. While all of this occurring, Comcast is looking to spend $34 billion or more to expand internationally by acquiring Sky.
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Comcast reported its Q2 ’18 results this morning, with the good news being the addition of 260K broadband subscribers, the best Q2 the company has experienced in the past 10 years, along with the improvement of operating margins. The broadband surge was Exhibit A for management to point to on the earnings call as evidence its strategy of being a “connectivity” provider is paying off.
However, Q2 ’18 also saw the loss of 140K video subscribers, the most in a Q2 since 2014. Video sub losses have accelerated from -4K in Q2 ’16 and -34K in Q2 ’17. On the earnings call, management put the blame squarely on virtual MVPDs or “skinny bundles,” adding that they “expect pressure to continue in the video business” as virtual MVPDs ramp up.
Comcast has officially dropped out of the bidding for the 21st Century Fox assets, clearing the path for Disney to move forward. Comcast still plans to pursue Sky in the UK. But by dropping its Fox bid, Comcast has also foregone the opportunity to take control of Hulu (by virtue of combining its 30% stake with Fox’s 30% stake). Presumably now Disney will take control of Hulu.
I believe this is a major missed opportunity for Comcast, leaving the company under-optimized in the fast-changing premium video industry. As we all know, today’s key industry themes include the rise of cord-cutting and consumers’ move to lower cost skinny bundles, the shift to on-demand viewing, with the accompanying growth of ad-free SVOD services (e.g. Netflix, Amazon, Hulu), the rapid adoption of connected TV and mobile devices for viewing and the nationalization/globalization of video services, among others.
Late yesterday, Comcast made its $65 billion all-cash offer for key Twenty-First Century Fox assets official. The offer sets up a bidding war with Disney, which had already struck a cash and stock deal with Fox. My guess is that Comcast is going to end up prevailing and the bidding will actually be less heated than many expect. There are many dimensions to this drama, but here are 5 quick reactions I have.
I’m pleased to present the 423rd edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
Apple and Amazon aren’t two companies that come to mind for helping traditional pay-TV operators, but this week brought news of both doing exactly that. Apple announced at its WWDC the integration of Charter’s Spectrum app in Apple TV that will allow users to gain “zero sign-on” access to the app’s content. Other operators have made their apps available on connected TV devices, but this was a first for Apple TV.
Then Amazon announced its Fire TV Cube, a mashup of Echo and Fire TV that also aspires to control your entertainment center. The device includes IR blasters to provide limited control over existing set-top boxes, a rare instance where Amazon is looking to help a prior technology rather than disrupt it.
Colin and I discuss both moves, as well as the broader context that we see for the “appification of TV.” This is already happening with vMVPDs and we expect over the next couple years all major pay-TV operators will have apps for their services available on all major CTVs. For consumers this will be a huge win as they can avoid renting often outdated and expensive set-tops.
(Note, Colin will be moderating the “Connected TV’s Ad-Supported Future” panel at the VideoNuze Online Video Ad Summit on Tuesday. Register now!)
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Amazon launched its new Fire TV Cube this morning - logically combining an Echo device with a Fire TV. But the Fire TV Cube has higher ambitions: to be an entertainment hub, controlling compatible TVs, sounds bars, A/V receivers and even cable or satellite set-top boxes, to deliver 4K TV. The set-top box integrations mean that Amazon is positioning the Fire TV Cube as a surprising friend to pay-TV, rather than a disruptor, the company’s typical role.
Amazon said that the Fire TV Cube is compatible with set-top boxes from Comcast, Dish and DirecTV, Spectrum, Verizon, Cox, Alice and Frontier, covering more than 90% of households with a cable or satellite subscription. The feat is accomplished through the use of IR blasters in the Fire TV Cube that can switch the input to the set-top box and then turn it on/off and change channels. I haven’t tried the Fire TV Cube yet so I don’t know how well any of this works, but my prior experiences with IR have shown it can be finicky.
I’m pleased to present the 421st edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.
On this week’s podcast we cover 3 different topics. First up is Comcast’s announcement this week this it plans an all-cash offer for the Fox assets Disney has agreed to buy. We don’t have time to fully analyze the move, but both of us see it as a bold doubling-down by Comcast on the traditional multichannel TV model. We speculate about whether Comcast should diversify with a skinny bundle offering, as I described yesterday in taking control of Hulu.
Next up we discuss new research from ACSI focused on the lagging role of movies in SVOD and Netflix specifically (which is being addressed with 86 releases in 2018). Lastly, we turn to data from Advertiser Perceptions showing ad buyers are only willing to pay a small premium to be in lighter ad load environments. I’ve previously speculated about whether the math would work for TV networks by reducing their ad loads.
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Yesterday’s confirmation by Comcast that it is preparing an all-cash bid for Fox assets that would top Disney’s current bid came as no surprise. All that remains now for this corporate drama to go into overdrive is the decision on June 12th in the AT&T-Time Warner court case. If that deal is approved (which I believe is likely), Comcast is expected to formalize its Fox offer almost immediately. As these machinations continue, one looming question is what will become of Hulu?
Hulu is of course a joint venture among Disney, Fox and Comcast (via its NBCUniversal acquisition), with each company owning 30% and Time Warner owning 10% (that’s rounding as Hulu employees also own a piece). That means the ultimate owner of the Fox assets - Disney or Comcast - will also become a majority owner of Hulu. It seems to me Hulu would be more valuable to Comcast, and indeed Comcast should be angling to try to figure out how to take control of Hulu regardless of how the larger Fox deal sorts out. Why?
Traditional pay-TV operators accounting for around 95% of the market lost 305K subscribers in Q1 ’18, compared to 515K in Q1 ’17 according to Leichtman Research Group. The loss is net of 405K Sling TV and DirecTV Now skinny bundle subscribers gained in the quarter by Dish and DirecTV, compared to 265K added in Q1 ’17. Backing out the skinny bundle gains, traditional pay-TV lost 710K subscribers in Q1 ’18 vs. a loss of 710K in Q1 ’17.
I’m pleased to present the 417th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia. We’re grateful to this week’s podcast sponsor, Ad-ID, which is the standard for identifying advertising assets. Ad-ID has recently released a new paper with examples of the value and importance of using a standard identifier. Learn more here.
On this week’s podcast, Colin and I analyze AT&T’s and Comcast’s video subscriber results for Q1 ’18, which were announced this week. AT&T has aggressively promoted its skinny bundle DirecTV Now, which gained 312K subscribers in Q1, more than offsetting the 188K loss for traditional DirecTV.
By contrast, because Comcast doesn’t have a meaningful skinny bundle (Xfinity Instant TV is mainly a broadcast TV package that also hasn’t been heavily promoted), it felt the full impact of losing 93K residential video subscribers.
While the underlying economics of skinny bundles remain questionable, AT&T has settled on a strategy of using their low-cost package to support their core wireless business. Multichannel pay-TV is a business that has contracting margins and accelerating subscriber defections. Colin and I speculate on whether Comcast should similarly embrace skinny bundles to support their core broadband business and have a meaningful alternative to provide to prospective cord-cutters.
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Comcast is continuing to add programming choices to its X1 set-top boxes, this morning announcing that the Sling TV international app will be made available. Sling TV international offers live and on-demand streaming of over 395 different networks, spanning 21 different languages. Pricing starts at $10 per month and new users can sign up on X1.
The addition of Sling TV international follows Comcast adding Netflix, YouTube, Pandora and NPR One to X1 over the past 6 months. Because X1 has a broadband connection and can run apps, it’s critical to Comcast’s strategy of bridging online content with traditional TV content. Late last year Comcast also announced deals with AMC and FX to offer subscription, ad-free services from both networks, exclusively for X1 subscribers.