Beachfront - leaderboard - 7-1-18

Analysis for 'Cable TV Operators'

  • Why Google, AT&T and Disney Are Now the Most Important Players in Pay-TV

    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).

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  • VideoNuze Podcast #430: Setting the Record Straight on Linear Viewing; Comcast Integrates Amazon Prime Video

    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 to Integrate Amazon Prime Video Into X1

    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).

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  • VideoNuze Podcast #429: Comcast’s Puzzling Video Strategy

    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 Q2: Skinny Bundles Are Taking Their Toll On Video Business, But No Defense Of It Is In Sight

    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.

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  • Comcast Drops Fox Bid, Foregoing A Major Opportunity With Hulu

    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.

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  • Comcast’s Fox Deal - 5 Quick Thoughts

    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.

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  • VideoNuze Podcast #423: Apple and Amazon Help Pay-TV Operators. Wait, What?

    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’s New Fire TV Cube Plays Nice With Pay-TV Set-Top Boxes

    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.

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  • VideoNuze Podcast #421: Comcast-Fox, SVOD Movies, Reduced Ad Loads

    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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  • Why Comcast Should Take Control of Hulu

    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?

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  • Traditional Pay-TV Subscriber Loss in Q1 Slows to 305K

    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.

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  • VideoNuze Podcast #417: Exploring AT&T’s and Comcast’s Divergent Video Strategies

    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 Adds Sling TV International Content to X1

    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.

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  • VideoNuze Podcast #411: TiVo Data Explains Traditional Pay-TV’s Downward Spiral

    I’m pleased to present the 411th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

    This week Colin and I share details from TiVo’s new Q4 ’17 Online Video & Pay-TV Trends report (download here), which shows how the high cost of multichannel TV subscriptions is leading to a record level of cord-cutting. The TiVo report also shows how SVOD has gained loyalty and that broadcast TV remains critical for many viewers.

    All of this adds up to a dynamic which Colin and I only see firming up further: consumers becoming more proactive through more cord-cutting and cobbling together SVOD subscriptions with low cost, “good enough” skinny bundles and/or antennas. Skinny bundles like YouTube TV, which includes broadcast will become market leaders, while those that don’t (or don’t offer a solution like Sling TV does) will be challenged. Absent a new catalyst, we see this as the state of play in the TV industry for the foreseeable future.

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  • Research: Pay-TV’s High Prices Continue Alienating Subscribers

    Cord-cutting is accelerating, and there’s a simple, unsurprising reason why: pay-TV service is just too expensive. For the fifth quarter in a row, that’s the finding of TiVo’s Online Video & Pay-TV Trends Report. In Q4 ’17, in response to the question “What factors influenced you to cancel your cable/satellite service?” the price/too expensive answer grew by 6.6 percentage points vs. Q4 ’16 to 86.7%, its highest level ever.

    Price/too expensive is by far the most important reason, with the second reason, “I use an Internet streaming service” at 39.7%, actually down 8.6 percentage points vs. Q4 ’16. Next was “I use an antenna to get the basic channels on my TV, at 23%, down 4.2 percentage points vs. Q4 ’16.

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  • Cord-Cutting Accelerates, Top Pay-TV Operators Lost Nearly 1.5 Million Subscribers in 2017

    The top 13 pay-TV operators in the U.S., which represent around 95% of the total market, lost nearly 1.5 million subscribers in 2017, double 2016’s loss of 760K subscribers, according to Leichtman Research Group. However, the loss would balloon to nearly 3.1 million subscribers after deducting the 1.6 million skinny bundle or “vMVPD” subscribers that were added in 2017. The 3.1 million multichannel subscriber loss is about 62% higher than the 1.9 million lost in 2016. The top 13 pay-TV operators ended 2017 with approximately 92.2 million subscribers.

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  • Research: Pay-TV Satisfaction is Up, But Price Remains Achilles Heel

    TiVo has released its Q2 ’17 Video Trends Report, finding among other things that satisfaction with the value of pay-TV among subscribers noticeably increased over the prior quarter even as price remains a major concern, and a driver of cord-cutting.

    TiVo found that 31.2% of subscribers said they’re “very satisfied” with the value of their pay-TV service, up 7.5 percentage points vs. Q1 ’17 and 11.6 percentage points over the past 2 years. Another 52.9% of subscribers said they’re “satisfied,” roughly flat with Q1 ’17. Respondents saying they’re “unsatisfied” dropped 6.9 percentage points vs. the prior quarter to 15.9%.

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  • Comcast Integrates YouTube Into X1 Set-Top Boxes

    Comcast announced this morning that YouTube has been launched on its X1 set-top boxes, further supporting Comcast’s strategy of becoming an “aggregator of aggregators.” Comcast integrated Netflix into X1 last November, the first major milestone of wrapping popular online video services into X1, which vastly simplifies viewers’ experiences.

    Billions of YouTube videos will now be available to X1 subscribers, equally accessible as Comcast’s own live, on-demand and DVR programming as well as online sources like Netflix. YouTube video will also be filtered into the Xfinity On Demand menu, and be available via the X1 voice remote. X1 users can search YouTube by voice or text by topic (beauty, cooking, music, etc.), by specific names of talent, shows and by live-streams.

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  • Turning the Tables, Newsy Pursues Pay-TV Distribution With RLTV Deal

    Here’s a somewhat counter-intuitive move: Newsy, a millennial-focused OTT news property, is buying the pay-TV carriage agreements of Retirement Living Television covering around 26 million multichannel TV subscribers in order to get a position on the cable dial. The deal will cost Newsy’s owner E.W. Scripps approximately $23 million, or 93 cents per RLTV subscriber. Newsy also expects to get to 40 million pay-TV subscribers by the end of 2018.

    The deal is predicated on developing Newsy into a “prominent multi-platform news network with dual revenue streams,” according to Scripps president and CEO Adam Symson. Newsy already has carriage deals with skinny bundles YouTube TV and Sling TV and clearly believes it can extend its audience reach and advertising potential by being available in multichannel bundles. Scripps also sees Newsy’s programming as helping pay-TV operators appeal to younger audiences.

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