VideoNuze Posts

Not that long ago, regional sports networks (RSNs) were the beachfront property of the pay-TV industry. RSNs had exclusive rights to air local sports teams’ games in their markets and rabid fans willing to pay virtually any price to watch (especially if the local team was having a winning season). But the icing on the cake was that even non-fans were often paying for pricey RSNs, because their fees cleverly became inseparable from the most popular TV packages. In short, RSNs practically had a license to print money.

But few things last forever, and RSNs have become the latest example of the Internet’s disruption. Yesterday, the NY Post reported that AT&T’s auction of four of its RSNs, in Denver, Houston, Pittsburgh and Seattle, has drawn meager interest. AT&T was looking to sell the group for around $1 billion, but the bids have come in “around or below $500 million.” A big red flag was the four RSNs’ financial performance - an expected drop in earnings from $115 million in 2019 to just $55 million in 2020.

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I’m pleased to present the 501st edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

This week we discuss Roku’s Q4 and full year 2019 results, which were reported late Thursday. Roku now has nearly 37 million active accounts, up almost 10 million in 2019. More important, Roku continues to demonstrate strong capability in monetizing its viewers, with ARPU up $5.19 to $23.14. Looking back over the past few years, Roku’s ability to pivot its business from being player-based to advertising and licensing-based is very impressive, all the more so because it has pulled it off under the long shadow of CTV competition from Amazon, Google and Apple.

Putting Roku’s growth in perspective though, Colin and I also spend a few minutes reviewing Nielsen’s latest Total Audience report, which showed that overall, streaming still accounts for just 19% of total TV usage. As Colin notes, it’s far higher for younger age groups and cord-cutters. Nonetheless, it’s hard not to conclude that it is still relatively early days for both ad-supported and subscription OTT.

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(Note: I own a small number of Roku shares)

Pixability has announced BrandTrack, a new competitive intelligence tool that helps advertisers optimize their presence on YouTube. BrandTrack provides detailed information on competitors within 25 different industries, showing metrics on channel growth, estimated ad spending, brand sentiment, top/trending videos, best practices at the video-specific level and more. Pixability is pulling the data directly from YouTube’s API and then applying its proprietary technology and UI/visualization to give advertisers easily digestible insights.

BrandTrack grew out of a professional service Pixability has been offering clients for a while. But, recognizing that advertisers need to be able to flexibly adjust their YouTube content/spending to maintain a competitive edge, the service has been productized into a SaaS offering available standalone ($2K-$10K per month, based on seats) or as part of the PixabilityONE platform.

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If you’re following media coverage of the “streaming wars” these days, you might think that the viewers have all but abandoned traditional TV. But Nielsen’s February 2020 Total Audience Report illustrates that this is far from the current situation. In fact, it’s still very early innings for OTT, which in turn suggests that if you think streaming is big already, well then - you ain’t seen nothing yet. 

Nielsen reports that in Q4 ’19 streaming accounted for just 19% of total TV usage time. Within that 19% streaming slice, Nielsen found that, no surprise, Netflix has the biggest piece (31%), followed by YouTube (21%), Hulu (12%) and Amazon (8%). Nielsen didn’t break out any other individual service that collectively amount for 28%.

Then translating each streaming service’s into its % of TV usage (remember, ALL streaming accounts for 19%), means Netflix accounts for 5.9% of TV usage, YouTube (4%), Hulu (2.3%), Amazon (1.5%) and others (5.3%).

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I’m pleased to present the 500th(!) edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

On today’s podcast, Colin is still mopping up his tears from the 49ers’ heartbreaker last Sunday night, but is being a good sport about the loss. He quickly recaps the game’s streaming audience and shares his insights.

This week’s main topics are Disney+ and YouTube. Coincidentally, this week we all got a first look at both of their performances, in Disney’s and Alphabet’s earnings reports, respectively. The headline from Disney+ was clearly the 28.6 million subscribers reported after just 84 days after launching - a noteworthy accomplishment by any standard. We discuss how sticky those subs are (i.e. what will the churn rate be?) and what Disney+ will need to do from here to keep up momentum.

Then we shift to YouTube; we’re both a little surprised that YouTube TV only has 2 million subscribers given how much advertising around marquee sports it has done (by comparison, Hulu Live had 3.2 million at the end of 2019). Nevertheless we are both quite bullish about YouTube going forward, particularly if Google decides to hold off price increases for some time and cord-cutting continues to accelerate. I believe the company as a whole could crack $25 billion in revenue in 2020.

(Apologies - Colin’s audio quality isn’t very good this week, we’re working to fix for future podcasts.)
 
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Back on November 13th, the day that Disney+ launched, I wrote, “Disney+ is a Winner.” I went on to describe my first experiences with the new service - the seamless sign-up process, extensive content, impressive UX (modeled mainly on best practices gleaned from other streaming services like Netflix), ability to download content for mobile use, etc.

My main takeaway then was: “Disney+ is a winner. Period. End of story. It will have millions of subscribers by the end of this holiday season, and a multiple of that a year from now. As international markets roll out, the millions will multiply again, many times.” In other words - although I’ll be the first to say that there are no guarantees with anything in life - Disney+, with its ridiculously low $7/mo price (and free for certain Verizon Wireless subscribers) - looked as close to a sure thing as I’d seen in a long, long time.

With Disney’s fiscal first quarter earnings report yesterday, it became official, Disney+ IS a winner. Period. End of Story. Disney reported having 26.5 million subscribers at the quarter’s end, Dec. 28th in the U.S and Canada. Since then Disney+ has gained another 2.1 million subscribers to be at 28.6 million as of this past Monday, Feb. 3rd.

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Finally, finally, finally, Google provided some transparency about YouTube’s financial condition, in its Q4 ’19 and full year 2019 earnings report yesterday. YouTube’s financials have been treated as a state secret by Google since the beginning of time, with only high level usage information periodically shared.

Even yesterday’s reveal was only for YT’s advertising revenue, which came in at $4.7 billion for Q4 ’19 and $15.1 billion for the year. YT’s subscription revenues - which consist of YT Music, YT Premium includes YT Music) and YT TV (its virtual pay-TV service) - were buried in “Google other revenue.” On the earnings call, CEO Sundar Pichai said all YT subscriptions had a $3 billion annual run rate at the end of 2019.  

Using some conservative assumptions and relatively quick math, it’s clear that YT’s total revenue could exceed $25 billion in 2020. As I also detail below, YT has to be considered among the best acquisitions in corporate America’s history. For Google, only the acquisition of Android (for the measly price of $50 million) could be considered more successful.

Here are my calculations:

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I’m pleased to present the 499th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

Earlier this week AT&T reported its Q4 ’19 earnings. There was plenty of lousy news, and as Colin and I discuss, at the top of the list was a loss of over 1.1 million pay-TV subscribers in the quarter, compared with 658K subs lost in Q4 ’18. For the full year, AT&T lost 4.1 million, more than 5x the 750K it lost in 2018. The combined 4.8 million subs that AT&T has lost in the past 2 years is nearly 20% of what it started with back on Dec. 31, 2017.

There is arguably no bigger influence on the pay-TV industry’s overall cord-cutting rate than AT&T because of its sheer size and outlier loss level. All of that - and lots of other factors - lead us to believe that the rate of cord-cutting is actually going to accelerate in 2020. Colin has crunched the numbers and believes when all the Q4 results are reported, the traditional industry (not including vMVPDs’ gains) will probably lose around 6.5-7 million subs in 2019. He sees that escalating to around 8.5 million in 2020.

We dig deeply into all of this on the podcast. We all have a front row seat to an industry in complete transformation. As it has in countless other industries, we are watching the Internet massively disrupt the pay-TV and TV industries.
 
Listen in to learn more!

 
Click here to listen to the podcast (24 minutes, 11 seconds)

Click here for previous podcasts

Click here to add the podcast feed to your RSS reader.

The VideoNuze podcast is also available in iTunes...subscribe today!