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 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?
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.
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.
This morning, FX and Comcast announced FX+, an ad-free subscription video on demand service available to Xfinity TV subscribers for $5.99 per month. FX+ is quite comprehensive, including full current seasons of 17 different FX shows (e.g. “The Americans,” “Atlanta,” “Taboo,” etc.) along with library seasons of 16 current and prior shows (e.g. “The Shield,” “The League,” “Nip/Tuck,” etc.). In all, there will be over 1,100 episodes of FX programming available to subscribers.
FX+ follows the recent announcement of AMC Premiere by AMC and Comcast, which is another ad-free SVOD service, available for $4.99 per month. However, AMC Premiere doesn’t include AMC’s deep library of popular programs, highlighted by “The Walking Dead,” “Breaking Bad” and “Mad Men,” while also including some original digital content. AMC Premiere’s shallow content selection suggests its success will be modest.
I’m pleased to present the 381st edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
This week we discuss both Comcast’s and AT&T’s Q2 ’17 video subscriber results, which were dramatically different, and what we see as the implications.
First, Comcast, lost 34K residential video subs in Q2 ’17, as compared with losing just 4K in Q2 ’16. Colin and I differ in our interpretation, with him more concerned that Comcast’s streak with X1 has likely run its course. I’m more sanguine because as I look more broadly, over the past 4 quarters, Comcast has managed to turn in exceptional performance in the face of massive cord-cutting headwinds.
By contrast, AT&T’s core video businesses - Uverse and DirecTV - have been hemorrhaging subscribers over the past year, and Q2 highlights how deeply discounted and bundled DirecTV Now is the only bright spot in video for AT&T. But as I explain, the company’s willingness to all but give away its skinny bundle to preserve its wireless business has potentially profound long-term consequences for the entire pay-TV industry, with Amazon increasingly well-positioned to be a big winner.
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If you’re like me, you may have noticed that recently you’ve become a little less patient when you to try to watch a video and things don’t go exactly right. Whether it’s difficulty finding the desired video, momentary buffering, an intrusive/irrelevant ad or some kind of device issue - these sources of friction are increasingly noticeable and in turn disappointing.
I don’t find this surprising. We live in a world where instant gratification and seamless user experiences are becoming the new normal. Those that don’t measure up stand out more readily as sore thumbs. Among other things, we can now do a super-convenient voice search using a smart speaker, request a personal driver though Uber or Lyft with just a few taps on our smartphones, get a refund on an Amazon return the moment the package is scanned at UPS and lots more. Simply put, for many of us, the Internet and apps are making life easier all the time.
An article in the WSJ over the weekend “Apple’s iTunes Falls Short in Battle for Video Viewers” caught my attention for a number of reasons, not least of which it touched on how quickly Comcast has succeeded in growing its market share in digital movie rentals and downloads.
While iTunes is estimated to still hold the market share lead in the digital movie rental and purchase industry with a share of between 20% to 35%, that’s down from over 50% in 2012. The article notes that Amazon’s share is now up to around 20% and Comcast’s is at 15%. For Amazon, video rentals and purchases represent another way it leverages its e-commerce expertise. Rentals/purchases are also very complementary to Amazon’s Prime Video service. In many ways, there’s nothing surprising at all about how Amazon has taken a bite out of Apple’s market share.
I’m pleased to present the 378th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
First up this week, Colin shares reactions to a presentation he attended by Jennifer Dorian, GM of Turner Classic Movies and FilmStruck about how TCM is focusing on its core fans to build community and strengthen its brand. Colin was very impressed with the range of initiatives TCM is taking as examples of how a traditional cable TV network can deepen its relationships with viewers.
We then transition to discuss AMC Premiere, the new $4.99 per month service recently launched by AMC and Comcast allowing ad-free viewing of current season programs. I really like the fact that the companies are experimenting with a new business model, but as I wrote, based on other similar services, I’m not super-confident that there is huge pent-up demand to pay extra to avoid ads, especially since the programming available is limited.
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AMC Premiere, an ad-free version of the popular cable network AMC, will be available for $4.99 per month to Comcast’s Xfinity TV subscribers, the latest initiative by pay-TV incumbents to offer more flexible access to viewers. AMC Premiere provides ad-free access to the network’s current season programs along with a variety of exclusive and first-look content and movies.
However, AMC Premiere does not include past seasons of “The Walking Dead” for example, or any of the iconic programming like “Mad Men” or “Breaking Bad,” which put AMC on the map for high-quality originals. All of those have long been licensed to Netflix. The most recent season of “The Walking Dead,” as well as prior ones, are available on demand from Comcast for $2.99 per episode. Many other shows from other networks are available at no charge on demand from Comcast.
There is an unmistakable trend taking hold in the wireless industry: video is quickly becoming bait for big carriers to lure and retain subscribers. All 4 of the biggest U.S. carriers have not only launched unlimited data plans, which are being explicitly promoted for video viewing, but in addition 3 of the 4 (T-Mobile, AT&T and Verizon) are also tying in aggressive discounts on video services. As I wrote recently, all of this carrier activity will drive more widespread mobile video use.
The start of the trend can clearly be traced to November, 2015 when T-Mobile launched its Binge On program, which now allows users to watch 120+ video services without impacting the user’s data plan. T-Mobile upped the ante in late 2016 by offering AT&T subscribers who switched to T-Mobile a full year of DirecTV Now for free (a $420 value). In January, T-Mobile further tweaked AT&T by adding a free year of Hulu for these subscribers because of the launch problems DirecTV Now experienced.
YouTube’s app will be added to Comcast’s X1 set-top box later this year, the companies announced this morning. The partnership is a win for both companies and for X1 users. YouTube gains seamless access to millions of X1 users who no longer have to switch inputs to a connected TV device to tap into YouTube’s massive video library on their TVs. For Comcast, integrated YouTube further expands X1’s value proposition as an all-in-one TV/video device.
Of note, the companies said that X1 users will be able to search the YouTube catalog with the X1 voice remote control. Searches for a favorite actor’s clips, a specific music video, recipes, workout routines and more will all be available when users add the word “YouTube” to their voice search request. The YouTube app will bring up relevant results in the same way as, for example, doing the same search on Siri with an iPhone.
I’m pleased to present the 356th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.
This week we explore the concept of “TV as an app,” which represents a paradigm shift in how TV is accessed by viewers. Of course the rise of Netflix, Amazon, Hulu and others has paved the way for app-based viewing, but an entire TV lineup being delivered via an app to a connected TV device is still a significant change from conventional set-top box-based viewing.
“TV as an app” got a boost this week with Comcast’s beta release of the Xfinity TV app for Roku. I’ve given it an initial try and provide some observations. In addition, Colin was moderating a panel on video apps this week and shares further insights he heard.
We then shift focus to this Sunday’s Super Bowl, which will once again feature multiple free streaming options as well as localized dynamic ad insertion in the streams, which is a first. I’m keeping an eye on the ads to see if they offer any meaningful viewer engagement.
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