VideoNuze Posts

With last week’s Q2 earnings report, Facebook forecast that margins would slide for the next couple of years into the mid-30% range due to higher costs associated with beefed up security. Meanwhile, quarterly growth will decelerate from the high 40% range (or more) from recent quarters to around 30% for the rest of the year.

Other companies would envy these targets, but given Facebook’s outsized historical growth and profitability, the stock has gotten hammered and dragged the whole tech sector down with it. One key takeaway for me from Facebook’s results and forecasts is that video is more important to the company than ever. Despite its potential, Facebook still doesn’t seem to have a video/monetization strategy. Among the big tech companies, only Apple’s video strategy seems less well-developed than Facebook’s.

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Video ad tech provider Cedato has introduced its Contextual Lookalike Targeting technology, which uses machine learning to analyze performance data from billions of videos ads in order to decide when and where to serve a new ad to suit an advertiser’s KPIs. The new technology leverages Cedato’s Predictive Knowledge Graph, which is based on data from 400 billion plus video ads.

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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.

Listen in to learn more!

 
Click here to listen to the podcast (24 minutes, 20 seconds)

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

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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AT&T’s skinny bundle DirecTV Now hit 1.8 million subscribers at the end of June, per AT&T’s Q2 ’18 earnings report, released yesterday. DirecTV Now added 342K subscribers in Q2 ’18, compared with 152K in Q2 ’18 and 312K in Q1 ’18. DirecTV Now’s gains more than offset the 286K traditional DirecTV subscribers lost in the quarter (almost double the 156K loss from a year ago), with U-verse also adding 24K (vs. a loss of 195K a year ago). Overall, AT&T ended the quarter with 25.449 million video subscribers compared with 25.172 million in Q2 ’17.

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Verizon reported its Q2 ’18 earnings this morning, which included a whopping $658 million pre-tax charge for shutting down its GO90 mobile video service (previously announced) that it launched less than 3 years ago, in October, 2015. If you combine the Q2 charge with the operating expenses, capital Verizon invested in GO90 plus the OnCue acquisition from Intel, it’s highly likely that the company lost well over $1 billion on the failed initiative.

For a behemoth like Verizon, a $1 billion loss barely registers. However, it’s almost certainly the biggest single investment any company has made to try to start a mobile video service from scratch (though former DreamWorks executive Jeffrey Katzenberg, whose NewTV startup has raised over $800 million could well take the crown from Verizon).

Given the magnitude of Verizon’s loss, it’s worth trying to understand how the GO90 bet went so wrong, so quickly. From my vantage point, there are 3 key lessons to be learned:

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Another sign of connected TVs’ ascendance: in a blog post on Friday, YouTube CEO Susan Wojcicki said that its users are now watching an average of over 180 million hours of YouTube video per day on TV screens. To put that in perspective, given the 1.9 billion logged-in users YouTube says it has per month, it would mean an average of almost 11 minutes per day per user watching YouTube on TV.

No doubt that’s far less that the average Netflix, Hulu or Amazon Prime Video subscriber spends watching those services on TV. And it also pales in comparison to the over 50% of YouTube consumption on mobile devices the company has touted for several years now.

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I’m pleased to present the 428th edition of the VideoNuze podcast, with my weekly partner Colin Dixon of nScreenMedia.

This week Colin and I discuss new research highlighting how younger viewers are shifting away from traditional TV and toward OTT sources. Colin recaps research from Hub Entertainment focusing on the US while I share highlights from Ofcom’s new Media Nations report covering viewing behaviors in the UK.

While the numbers are slightly different, the general trends are similar. For example, in the US, just 26% of 18-34 year-olds consider live TV their default service. In the UK, for 18-34 year-olds, 54% of their video consumption is now from OTT sources.

Listen in to learn more!

 
Click here to listen to the podcast (24 minutes, 4 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!